Noland, Inc

question 216

Multiple Choice

Noland, Inc. uses the LIFO method of inventory costing and is facing the possibility of a LIFO liquidation for the current year. Merchandise purchase prices have increased since the LIFO method was adopted. If the company does not purchase additional merchandise before year-end, which one of the following effects will occur as a result of a LIFO liquidation?

• A)Reported earnings for the current year will be higher.
• B)Income taxes for the current year will be lower.
• C)Cost of goods sold for the current year will be higher.
• D)Gross margin for the current year will be lower.

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Definitions:

Duty of Segregation

An obligation to keep different tasks and responsibilities separate to reduce conflicts of interest or the risk of fraud or error.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of money, property, or confidential information.

Actual Authority

The express and implied powers a principal intentionally grants to an agent, allowing them to act on the principal's behalf.

Duty of Loyalty

A legal obligation of individuals, such as directors of a company or trustees, to act in the best interests of the company or trust, over and above their own interests.