Which of the Following Is a Disadvantage to Business of the LIFO

question 32

Multiple Choice

Which of the following is a disadvantage to business of the LIFO method of applying costs to inventory?

• A) Current income is matched with the most recent costs of acquiring goods.
• B) It understates the balance sheet value for inventory.
• C) It is difficult for a computer program to apply the method.
• D) If it is allowed for tax purposes, in times of rising prices it results in less tax being paid in the current period.

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Definitions:

Vital Capacity

The maximum amount of air a person can exhale after maximum inhalation, used to assess the health of the respiratory system.

Hemoglobin

A component of red blood cells, tasked with ferrying oxygen from the lungs to various bodily locations.

Plasma

The liquid component of blood in which the blood cells are suspended, consisting mainly of water, proteins, and salts.

Residual Volume

The amount of air remaining in the lungs after a forceful exhalation, ensuring that gas exchange continues even between breaths.