Accounting Procedures Allow a Business to Evaluate Their Inventory at LIFO

question 39

Multiple Choice

Accounting procedures allow a business to evaluate their inventory at LIFO (Last In First Out) or FIFO (First In First Out) . A manufacturer evaluated its finished goods inventory (in $1000) for five products both ways. Based on the following results, is LIFO more effective in keeping the value of his inventory lower? What is the decision at the 5% level of significance?

• A) Fail to reject the null hypothesis and conclude LIFO is more effective.
• B) Reject the null hypothesis and conclude LIFO is more effective.
• C) Reject the alternate hypothesis and conclude LIFO is more effective.
• D) Fail to reject the null hypothesis and conclude LIFO is not more effective.

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