What Happens When Prices Are Falling

question 18

Multiple Choice

What happens when prices are falling?

• A)LIFO will result in lower net income and a lower inventory valuation than will FIFO.
• B)LIFO will result in lower net income and a higher inventory valuation than will FIFO.
• C)LIFO will result in higher net income and a higher inventory valuation than will FIFO.
• D)LIFO will result in higher net income and a lower inventory valuation than will FIFO.

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Definitions:

Theory

A system of ideas intended to explain something, based on general principles independent of the thing to be explained.

Experimental Group

In a scientific study, this is the group that receives the treatment or intervention being tested, allowing researchers to observe its effects in comparison to a control group.

Control Group

In experiments, a group of subjects that does not receive the treatment being tested, used as a benchmark to measure the effects of the treatment on the experimental group.

Dependent Variable

In research, it is the variable that is being tested and measured, usually to see if it is affected by the independent variable.