Accounting Procedures Allow a Business to Evaluate Their Inventory Costs

question 54

Multiple Choice

Accounting procedures allow a business to evaluate their inventory costs based on two methods: LIFO (Last In First Out) or FIFO (First In First Out) . A manufacturer evaluated its finished goods inventory (in $000s) for five products with the LIFO and FIFO methods. To analyze the difference, they computed (FIFO - LIFO) for each product. Based on the following results, does the LIFO method result in a lower cost of inventory than the FIFO method? If you use the 5% level of significance, what is the critical t value?

• A)+2.132
• B)±2.132
• C)+2.262
• D)±2.228

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Definitions:

Normative Economics

A branch of economics that focuses on what ought to be or what should happen, often involving judgments and prescriptions for economic policy.

Positive Economics

A branch of economics that seeks to describe and explain the economy as it actually is, without making judgments about its effectiveness.

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Empirical Economics

The branch of economics that focuses on using data and statistical methods to analyze and test economic theories.