Which of the Following Statements Is Not a Characteristic of the LIFO

question 112

Multiple Choice

Which of the following statements is not a characteristic of the LIFO method of pricing inventory?

• A) During a period of rising prices, LIFO tends to minimize the amounts of income taxes owed.
• B) The cost of goods sold is measured in relatively current costs.
• C) Inventory is valued at relatively current costs.
• D) None of the above; these statements all describe characteristics of the LIFO method.

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Definitions:

Unit Product Cost

The total cost associated with producing a single unit of a product, including materials, labor, and overhead.

Common Fixed Expenses

Ongoing expenses that do not vary with production volume or business activity, shared across departments or products.

Business Segments

Distinct parts of a company that can be separately analyzed for profitability and operational efficiency.

Variable Costing

A pricing approach that incorporates only variable production expenses—such as direct materials, direct labor, and variable manufacturing overhead—into the costs of products.