Question 4:

• Proficient:
  • If inventory is being valued at cost and the price level is steadily rising, which of the following three methods of costingFIFO, LIFO, or weighted average costwill yield the lowest annual after tax net income?
  • Which method will yield the highest after tax net income in a scenario where the price level is steadily declining?
• Distinguished:
  • Which of the three methods of inventory will in general yield an inventory cost most nearly approximating current replacement cost?