Accounting Procedures Allow a Business to Evaluate Their Inventory Costs

question 62

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? If you use the 5% level of significance, what is the critical t value?

• A) +2.132
• B) ±2.132
• C) +2.262
• D) ±2.228

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