An Entity Changed from the FIFO to the LIFO Cost

question 36

Multiple Choice

An entity changed from the FIFO to the LIFO cost flow assumption for inventories.Assuming that inventory and sales remain constant over time,and that prices are rising,how would the current ratio be changed as a result of converting from FIFO to LIFO?

• A) The current ratio did not change.
• B) The current ratio increased.
• C) The current ratio decreased.
• D) The effect on the current ratio cannot be determined from the information given.

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Understanding the most respected professions based on ethical standards.

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Definitions:

Accommodating

A conflict management style in which one cooperates with the other party while not asserting one’s own interests.

Cooperates

To work or act together towards a common goal or purpose.

Asserting Interests

The act of clearly and confidently making one's desires or needs known, often in the context of negotiation or conflict resolution.

Competing Style

A conflict resolution approach where one puts their own interests above everyone else's to win.