When Changing from the Average Cost Method to FIFO, the Company

question 89

Multiple Choice

When changing from the average cost method to FIFO, the company:

• A) Includes in current year's income the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years.
• B) Revises comparative financial statements.
• C) Records a journal entry to adjust the book balances from their current amounts to what those balances would have been using FIFO.
• D) All of these answer choices are correct.

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Definitions:

Population B

This term on its own lacks context; typically, it would refer to a specific group or subset within a larger population in a study or model.

Gini Ratios

A metric assessing the uneven distribution of income among individuals in a population, with 0 being total equality and 1 representing absolute inequality.

Income Inequality

The disparate sharing of income among participants in an economy, be they individuals or households.