When Prices Are Rising, Valuing Ending Inventory Using the FIFO

question 48

Multiple Choice

When prices are rising, valuing ending inventory using the FIFO method rather than weighted average cost gives:

• A) inventory a higher value but lowers profit.
• B) inventory a lower value and also lowers profit.
• C) both inventory and profit a higher value.
• D) inventory a lower value and profit a higher value.

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Definitions:

Median

The value separating the higher half from the lower half of a data sample or probability distribution.

Positively Skewed Distribution

A distribution where the tail is longer on the right side of the peak, indicating that most data points are on the left.

Interquartile Range

A measure of statistical dispersion, represented by the difference between the 25th and 75th percentiles of a dataset.

Median

The middle value in a dataset when it is arranged in ascending or descending order, or the average of the two middle values if the dataset has an even number of observations.