The Use of LIFO in Accounting for a Firm's Inventory

question 87

Multiple Choice

The use of LIFO in accounting for a firm's inventory:

• A)Usually matches the physical flow of goods through the business.
• B)Is usually used for internal management purposes.
• C)Usually provides a better match of expenses with revenues.
• D)None of the above is correct.

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Definitions:

Net After-Tax Salvage Value

The estimated resale value of an asset at the end of its useful life, minus any removal or disposal costs, and adjusted for taxes.

Recapture

A tax provision where previously deducted or credited amounts are added back to income.

Tax Rate

The share of income that is required to be paid to the government by an individual or corporation as tax.

Mutually Exclusive Projects

Projects that, if accepted, preclude the acceptance of any other projects within the same category.