Managements Face the Decision as to When to Replenish Inventories

question 53

Multiple Choice

Managements face the decision as to when to replenish inventories at year-end.Assuming inflation, a company using LIFO would experience which of the following?

• A)Buy in December and these higher acquisition costs go into cost of goods sold.Wait until January of next year to purchase and the current year's cost of goods sold contains costs older, usually lower, than December's.
• B)Buy in December and these lower acquisition costs go into cost of goods sold.Wait until January of next year to purchase and the current year's cost of goods sold contains costs older, usually higher, than December's.
• C)Buy in December and these higher acquisition costs go into cost of goods sold.Wait until January of next year to purchase and the current year's cost of goods sold contains costs older, usually higher, than December's.
• D)Buy in December and these lower acquisition costs go into cost of goods sold.Wait until January of next year to purchase and the current year's cost of goods sold contains costs older, usually lower, than December's.
• E)none of the above