Which of the Following Is Not Correct Regarding Inventory Procedures

question 80

Multiple Choice

Which of the following is not correct regarding inventory procedures reported in an interim financial statement?

• A) LIFO liquidations expected to be replaced by the end of the year are accounted for in cost of goods sold at expected replacement cost rather than original LIFO cost.
• B) Lower-of-cost-or-market adjustments are not made for the interim period if they are expected to reverse by the end of the year.
• C) Variances in a standard costing system are reported at the end of the interim period unless they are expected to be absorbed by year-end.
• D) FIFO is remeasured using the LIFO method in an interim financial statement.
• E) LIFO liquidations not expected to be replaced by the end of the year are reflected in cost of goods sold at original LIFO cost.

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Definitions:

Average Tax Rate

The proportion of total income that is paid as taxes, calculated by dividing the total amount of taxes paid by the taxpayer's total income.

Horizontal Equity

The principle that individuals with similar income or assets should pay the same amount in taxes.

Vertical Equity

A principle in taxation where taxpayers with a greater ability to pay, pay more in taxes, demonstrating a progressive tax system.

Small Economy

An economy that is limited in size, characterized by a smaller population, lower GDP, and less impact on international markets compared to larger economies.