Accounting Procedures Allow a Business to Evaluate Their Inventory Costs

question 57

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? What are the degrees of freedom?

• A)4
• B)5
• C)15
• D)10

---

Definitions:

Spatial Orientation

An individual's ability to recognize themselves or objects in relation to environment, direction, and position in space.

Numeric Ability

The capacity to understand, manipulate, and interpret numbers and mathematical concepts.

Warner Schaie

An American psychologist known for his research on adult development and aging, particularly his work on the Seattle Longitudinal Study which investigates cognitive changes across the lifespan.

Procedural Memory

A type of long-term memory that encompasses the skills and routines that are performed automatically or without conscious thought, such as riding a bike or tying shoelaces.