A Firm Has Used LIFO for Several Years During Which

question 52

Multiple Choice

A firm has used LIFO for several years during which costs have trended higher. The effect on 2017 net income using LIFO, relative to FIFO, will be:

• A) net income for 2017 will be greater under LIFO than FIFO.
• B) net income for 2017 will be less under LIFO than FIFO.
• C) net income for 2017 will be the same under LIFO as under FIFO.
• D)can't tell from the information given.

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Definitions:

Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Journal Entries

Recorded transactions in the accounting system that show the effects of financial events on the accounts of a company.

Investment Account

An account held at a financial institution that contains securities, cash, and other investment vehicles.

Related Income

Income that arises from transactions or relationships between entities that have a special connection or are part of the same group.