FIFO Reports Higher Gross Profit and Net Income Than the LIFO

question 171

Multiple Choice

FIFO reports higher gross profit and net income than the LIFO method when ​

• A) ​prices are increasing
• B) ​prices are decreasing
• C) ​prices remain stable
• D) ​prices are reduced by 50%

Understand the relationship and trade-off between Type I and Type II errors.

Identify scenarios of Type I and Type II errors.

Understand the definition and consequences of Type I and Type II errors, including their probabilities (α and β).

Recognize the importance of the null hypothesis and the conditions under which it can be rejected.

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Definitions:

Capital Gains

The profit made from selling an asset at a higher price than its purchase price.

Payout Ratio

A financial metric that shows the percentage of a company's earnings paid to shareholders as dividends.

Dividends

Payments made by a corporation to its shareholder members, often derived from the company's profits.

Stockholders

Stockholders, also known as shareholders, are individuals or entities that own one or more shares of stock in a public or private corporation.