If Inventory Costs Are Rising and a Company Is Using

question 139

Multiple Choice

If inventory costs are rising and a company is using LIFO,large purchases of inventory near the end of the year will:

• A)increase income taxes paid.
• B)decrease income taxes paid.
• C)not change the amount of income taxes paid.
• D)cannot be determined.

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Definitions:

Budgeted Sales

The forecasted sales for a specific period, serving as a key component of financial and operational planning.

Credit Sales

Transactions where goods or services are provided to a customer with the agreement that payment will be made at a later date.

Direct Labor

The labor costs directly associated with the production of goods, such as wages for assembly line workers.

Cash Receipts

Represents the money received by a company from its operational activities, usually documented during the accounting period when they are received.