Accounting Procedures Allow a Business to Evaluate Their Inventory Costs

question 34

Multiple Choice

Accounting procedures allow a business to evaluate their inventory costs based on two methods: LIFO (Last In First Out) or FIFO (First In First Out) . A manufacturer evaluated its finished goods inventory (in $000s) for five products with the LIFO and FIFO methods. To analyze the difference, they computed (FIFO - LIFO) for each product. Based on the following results, does the LIFO method result in a lower cost of inventory than the FIFO method? What are the degrees of freedom?

• A) 4
• B) 5
• C) 15
• D) 10

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Definitions:

Nucleus

A membrane-bound organelle found in eukaryotic cells, containing most of the cell's genetic material.

Smooth

A type of involuntary muscle tissue found in internal organs.

Walls

Structures designed to divide or enclose areas, commonly constructed from materials like brick, stone, or wood.

Organs

Structures composed of different tissues that perform specific functions within an organism, such as the heart, liver, or lungs.