An Entity Changed from the FIFO to the LIFO Cost

question 36

Multiple Choice

An entity changed from the FIFO to the LIFO cost flow assumption for inventories.Assuming that inventory and sales remain constant over time,and that prices are rising,how would the current ratio be changed as a result of converting from FIFO to LIFO?

• A) The current ratio did not change.
• B) The current ratio increased.
• C) The current ratio decreased.
• D) The effect on the current ratio cannot be determined from the information given.

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Definitions:

Sample Proportion

The fraction of items in a sample that possess a particular attribute or characteristic.

Statistical Measure

A quantitative value derived from a sample or population, used to summarize or describe characteristics of data.

Sample Mean

The arithmetic average of a set of sample observations, used as an estimate of the population mean.

Sample Median

The middle value in a sorted list of numbers from a selected sample, which divides the data into two equal halves.