When a LIFO Liquidation Occurs

question 128

Multiple Choice

When a LIFO liquidation occurs:

• A) the company must dip into the older layers of inventory cost to compute the cost of goods sold.
• B) and prices are rising, newer, higher, costs are shifted into cost of goods sold.
• C) net income decreases.
• D) income taxes decrease.

---

Definitions:

Climate of Opinion

The dominant or prevailing set of attitudes, beliefs, or sentiments held by a particular group or society at a given time.

Environmental Protection Agency

An independent executive agency of the United States federal government tasked with environmental protection matters and regulating the implementation of laws intended to protect the environment.

Offshore Drilling

The mechanical process of drilling below the seabed for the extraction of oil and gas resources.

Federal Agencies

Organizations within the government of the United States that are tasked with the administration of specific legislation and the execution of laws and policies.