In a Period of Rising Prices,the Liquidation of Base-Layer Inventory

question 10

Multiple Choice

In a period of rising prices,the liquidation of base-layer inventory will result in an unusually high income tax liability under which of the following methods?

• A)Specific identification
• B)Average-cost
• C)LIFO
• D)FIFO

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflecting the riskiness of the investment or the cost of capital.

Total Cost Approach

A method in supply chain management that considers all costs associated with acquiring, transporting, and holding goods alongside their purchase price.

Discount Factor(s)

A multiplier used in discounting or present value calculations that reflects the time value of money.

Required Rate of Return

The minimum percentage return that an investor expects to receive from an investment, considering its risk.