In a Period of Rising Prices, a Company Is Most

question 90

Multiple Choice

In a period of rising prices, a company is most likely to use the FIFO method of pricing inventory if:

• A) Each item in the inventory is unique.
• B) Management wants the same unit cost assigned to items sold and items remaining in inventory.
• C) Management's primary objective is to minimize income taxes.
• D) Management wants the company's income statement to indicate the highest possible amounts of gross profit and profit for the period.

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Definitions:

Excise Taxes

Taxes imposed on specific goods, services, or transactions, typically aimed at discouraging their consumption or raising revenue for specific purposes.

Per-Unit Taxes

Taxes that are charged on a per-item basis, often levied on specific goods or services, such as gasoline or cigarettes.

Medicare & Medicaid

Federal programs in the United States that provide health coverage; Medicare serves older adults and some younger disabled individuals, while Medicaid assists low-income people.

Progressive Tax Structure

A tax system in which the tax rate increases as the taxable amount or income increases, placing a heavier burden on those who can afford to pay more.