When Comparing the Results of LIFO and FIFO When Inventory

question 49

Multiple Choice

When comparing the results of LIFO and FIFO when inventory costs are decreasing:

• A)cost of goods sold will be the lowest using FIFO.
• B)ending inventory will be the highest using FIFO.
• C)cost of goods sold will be the highest using LIFO.
• D)ending inventory will be the highest using LIFO.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in the open market.

Operating Activities

These are the primary day-to-day activities of a company involved in producing and delivering its products or services, which are reflected in the income statement.

Utility Bill

An invoice for services provided by utility companies, such as electricity, water, and gas.

Amortization

The process of spreading the cost of an intangible asset over its useful life.