Which of the Following Statements About Inventories Is True

question 47

Multiple Choice

Which of the following statements about inventories is true?

• A) U.S. generally accepted accounting principles (GAAP) require the use of lower-of-cost or market-valuation basis for inventories.
• B) Last-in, last-out (LIFO) inventory accounting makes management of income more difficult than first-in, first-out (FIFO) accounting.
• C) During inflation, LIFO inventory accounting tends to overstate the current ratio.
• D) FIFO inventory balances generally contain old and outdated costs that have little or no relationship to current costs.

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Definitions:

Incapacity

A physical or mental condition that makes an individual unable to manage their own affairs or to understand the nature and effects of their actions.

Married Women

Women who are legally joined in marriage to a spouse, often subject to specific legal rights and obligations distinct from unmarried women.

Incapacitated

A state where an individual is unable to take care of themselves or their affairs due to physical or mental disabilities.

Contract Law

The body of law that governs the formation, enforcement, and interpretation of agreements between parties.