The Primary Reason for the Popularity of LIFO Is That

question 108

Multiple Choice

The primary reason for the popularity of LIFO is that it:

• A) Provides better matching of physical flow and cost flow.
• B) Saves income taxes currently.
• C) Simplifies recordkeeping.
• D) Provides a permanent reduction of income taxes.

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Definitions:

Accumulated Depreciation

The aggregate depreciation cost that has been accounted for a particular asset since its first operational use.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life for accounting purposes, reflecting wear and tear.

Salvage Value

The predicted value that an asset retains at the end of its service period.

Straight-Line Depreciation

Straight-line depreciation is a method of allocating the cost of a fixed asset evenly over its useful life, assuming a constant rate of depreciation each year.