Which of the Following Would Not Be a Reasonable Conclusion

question 33

Multiple Choice

Which of the following would not be a reasonable conclusion when comparing LIFO-FIFO under an inflationary condition?

• A)FIFO generally results in a lower profit than does LIFO.
• B)FIFO reports a higher inventory ending balance.
• C)LIFO results in a lower profit figure than does FIFO.
• D)LIFO would probably be used for inventory that has a high turnover rate because there would be an immaterial difference in the results between LIFO ad FIFO.
• E)The cash flow under LIFO is greater than the cash flow under FIFO by the difference in the resulting tax between the two methods.

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Definitions:

Dun & Bradstreet Report

A report generated by Dun & Bradstreet that provides detailed financial and operational information on businesses, used for credit analysis.

Financial Statements

Formal records of the financial activities and condition of a business, person, or other entity, usually comprising the balance sheet, income statement, and cash flow statement.

Credit Report

A detailed report of an individual's credit history prepared by a credit bureau and used by lenders to determine a loan applicant's creditworthiness.

Aging of Receivables

The process of categorizing accounts receivable according to the length of time an invoice has been outstanding for better management of credit risk.