Which of the Following Is True Regarding LIFO and FIFO

question 79

Multiple Choice

Which of the following is true regarding LIFO and FIFO?

• A)In a period of decreasing costs,LIFO results in lower total assets than FIFO.
• B)In a period of decreasing costs,LIFO results in lower net income than FIFO.
• C)In a period of rising costs,LIFO results in lower net income than FIFO.
• D)The amount reported for COGS is based on market value of inventory if LIFO is used.

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Definitions:

Reserves

Funds or assets set aside to cover future expenses, losses, or liabilities.

Asset Revaluations

The process of adjusting the book value of a company's assets to reflect their current market values.

Stated Value

A value assigned to no-par value stock by the company's board of directors, used as a basis for accounting and financial reporting.

Common Stock

Equity ownership in a corporation, with claims on its earnings and assets being secondary to those of bondholders and preferred shareholders.