Which One of the Following Is an Advantage of LIFO

question 1

Multiple Choice

Which one of the following is an advantage of LIFO?

• A)In periods of rising prices, less income taxes are paid.
• B)In periods of rising prices, more holding gains are reported in net income.
• C)Record keeping and financial statement preparation are easier.
• D)Conservative income statements and balance sheet disclosures result from falling prices.

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Definitions:

Maximizing Profits

The process or strategy of adjusting production or operation dimensions to achieve the greatest possible financial return.

Potentially Efficient

A situation where a system or process has the capability to achieve optimal productivity, but currently may not be doing so.

Value of Gains

The increase in worth or benefit that accrues to an entity, often measured in terms of profits, utility, or increased assets.

Value of Losses

The total monetary value associated with the loss of resources, assets, or functionalities within a specified period.