If Inventory Costs Are Rising and a Company Is Using

question 139

Multiple Choice

If inventory costs are rising and a company is using LIFO,large purchases of inventory near the end of the year will:

• A)increase income taxes paid.
• B)decrease income taxes paid.
• C)not change the amount of income taxes paid.
• D)cannot be determined.

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Definitions:

Output

is the total amount of goods and services produced by an economy, firm, or production process.

Market Price

The actual selling price of a good or service in the marketplace, influenced by supply and demand.

Long Run

A period in which all factors of production and costs can be fully adjusted, including entry and exit of firms.

Economic Profits

Profits that exceed the opportunity costs of all inputs, indicating a return beyond the norm expected in competitive markets.