Summer,Inc

question 37

Multiple Choice

Summer,Inc.has been in business for 20 years.During that time,the company has consistently used the LIFO inventory costing method.Because of inflation,prices for merchandise have increased consistently over the 20 years.The company has maintained the same inventory quantities over the 20-year period.Which of the following statements is true?

• A)Summer's total net income for the past 20 years is greater than it would have reported using another inventory method.
• B)Summer will have paid more income taxes over the past 20 years than it would have if it had used the FIFO method.
• C)Summer will have to continue using the LIFO method indefinitely because of generally accepted accounting principles and federal income tax rules.
• D)The ending inventory figure reported on the balance sheet may be significantly lower than its current value.

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Definitions:

Competitive

The state or quality of having a competitive advantage or being able to compete effectively in the market.

Collaborative

Involving two or more parties working together towards a common goal, often seen in partnerships between businesses to enhance performance or innovation.

Objective Rating Systems

Systems or methods used to evaluate or assess performance quantitatively, based on impartial and measurable criteria.

Evaluation

The systematic assessment of processes, systems, or organizations to measure performance, effectiveness, or value.