Comparison of LIFO and FIFO

question 8

Essay

Comparison of LIFO and FIFO
Company X and Company Y sell the same product. The cost of this product has been rising steadily throughout the year. Both companies reported the same net income for the year, although Company X used the first-in, first-out method of pricing inventory, while Company Y used the last-in, first-out method.
(a) Which company's valuation of ending inventory in the balance sheet is more likely to approximate replacement cost?
Company ______________________________
(b) Which company reports a cost of goods sold figure in the current year income statement that is more likely to reflect the replacement cost of the units sold?
Company ______________________________
(c) Which company is minimizing income taxes it must pay?
Company ______________________________
(d) Which company would have reported the higher net income if both companies had used the same method of pricing inventory?
Company ______________________________

Recognize the legal principles that apply to ambiguous contract terms.

Understand the legal concept of a quasi contract and its application.

Recognize situations where contracts may face challenges in their enforceability due to the nature of the agreement.

Identify the consequences of contract avoidance.

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Definitions:

Non-directional

A type of hypothesis that does not specify the direction of the expected relationship between variables.

Standard Error

A measure indicating the amount of variation or dispersion of a set of values; specifically, it reflects how much sampling variability a statistic possesses.

Variability

The degree to which data points in a statistical distribution or data set diverge from the mean value.

Sample Means

The average value obtained from a sample, which is a subset of a larger population.