The Income Tax Saved by Using LIFO Instead of FIFO

question 114

Multiple Choice

The income tax saved by using LIFO instead of FIFO is equal to the ________ times the income tax rate.

• A)cost of the ending inventory
• B)retail price of the ending inventory
• C)cost of the beginning inventory
• D)LIFO Reserve

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Definitions:

Reportable

Information or events significant enough to be disclosed in financial statements or to regulatory bodies.

Operating Segment

A component of a company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses related to transactions with other components of the same company.

Consolidated Assets

The total assets of a parent company and its subsidiaries, combined into one financial statement as if they were a single entity.

Asset Test

A measure of a company's liquidity, calculated by comparing its most liquid assets to its current liabilities.