When Prices Are Rising, a Company Using the FIFO Costing

question 179

True/False

When prices are rising, a company using the FIFO costing method will generally pay less taxes than if the company had been using the LIFO method.

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Definitions:

Financial Accounting Reports

Formal documents that communicate an organization's financial performance and position to external stakeholders, including income statements and balance sheets.

GAAP

Generally Accepted Accounting Principles; a set of rules and standards for financial reporting used in the United States.

Prime Costs

The combined total of direct labor and direct materials cost incurred in the manufacturing of products.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are an integral part of the finished product.