When Input Prices Are Increasing,companies That Use the LIFO Method

question 27

Multiple Choice

When input prices are increasing,companies that use the LIFO method of accounting for inventory will report:

• A) Lower cost of goods sold amounts in comparison to the FIFO method
• B) Higher sales amounts in comparison to the FIFO method
• C) Higher ending inventory amounts in comparison to the FIFO method
• D) Lower gross profit margins in comparison to the FIFO method

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Definitions:

Balances

The amounts remaining in various accounts, such as bank accounts or ledger accounts, at a certain point in time.

December 31

December 31 typically refers to the last day of the year in the Gregorian calendar, often associated with year-end financial statements and tax considerations.

Balance Sheet

A financial report detailing a company's assets, liabilities, and owners' equity at a given moment, offering an overview of its financial health.

General Journal

The general journal is a comprehensive record of financial transactions, arranged in chronological order, used in an entity's double-entry bookkeeping system.