GG Inc Uses LIFO

question 13

Multiple Choice

GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2009 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2008. Assuming GG has a 40% income tax rate:

• A)Its reported cost of goods sold for 2009 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 2009 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.
• C)Its reported net income for 2009 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
• D)Its reported net income for 2009 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.This is (1 tax rate) the pre-tax effect of $15 million.

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Definitions:

Reciprocal Obligations

Mutual responsibilities or duties exchanged between parties, where each party has an obligation to the other.

Realistic Job Preview

An accurate presentation of the potential positives and negatives of a job to prospective employees.

Socialization

The process by which individuals learn and adopt the norms, values, behaviors, and skills necessary to participate effectively in a society or organization.

PJ Fit

Person-Job Fit; the compatibility between an individual's characteristics and the requirements of a specific job.