Johnston Controls Began Operation in 2014 Using FIFO Inventory Methods

question 260

Multiple Choice

Johnston Controls began operation in 2014 using FIFO inventory methods.In 2015,management decided they should have chosen LIFO to more accurately portray financial position and performance.The beginning 2015 inventory using FIFO was $100,000.Under the LIFO method the beginning inventory would have been $120,000.The adjustment to inventory for the accounting principal change for 2014 would be ________.

• A)$0
• B)$10,000 debit
• C)$20,000 credit
• D)$20,000 debit

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Definitions:

Investments

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Risk-averse

Describes an individual's preference for certainty or guaranteed outcomes over uncertainty or potential losses.

Marginal Utility

The additional satisfaction a consumer gains from consuming one more unit of a good or service.

Income

The money received, especially on a regular basis, for work or through investments.