GG IncUses LIFO

question 45

Multiple Choice

GG Inc.uses LIFO.GG disclosed that if FIFO had been used,inventory at the end of 2016 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2015.Assuming GG has a 40% income tax rate:

• A)Its reported cost of goods sold for 2016 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
• B)Its reported cost of goods sold for 2016 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.
• C)Its reported net income for 2016 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
• D)Its reported net income for 2016 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.

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Definitions:

Equilibrium Price

The price at which the quantity of a good supplied is equal to the quantity demanded, leading to market stability.

Entire Burden

The total impact or effect of something, often related to the full cost or responsibility borne by an entity.

After-Tax Equilibrium

The balance or condition of a market after the effects of taxes have been considered, reflecting the impact on prices and quantities of goods and services.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good supplied.