The Following Data Was Collected from the Accounting Records of Ambrose

question 36

Multiple Choice

The following data was collected from the accounting records of Ambrose, Inc., for the month of June. 200 units were sold during the month. Ambrose currently uses the FIFO method of valuing inventory. What would have been the difference in Ambrose's ending inventory under the LIFO costing method?

• A) Ending inventory would have been $120 higher.
• B) Ending inventory would have been $120 lower.
• C) Ending inventory is the same under both methods.
• D) The difference cannot be determined using this information.

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Definitions:

Aggressive Optimism

A mindset or investment strategy characterized by a high expectation for positive outcomes, often leading to higher risk-taking.

Conservatism

In accounting, it is a principle that requires potential expenses and liabilities to be recognized immediately, but revenues only when they are ensured.

Indirect Planning Assumptions

Presumptions made about external factors that could influence an organization's planning, without direct control over them.

Direct Planning Assumptions

Fundamental assumptions that are explicitly stated and used as a base in the strategic planning and forecasting processes.