SPI A Co has been in business for 15 years During that time, the company has consistently used the LIFO method of inventory costing Because of inflation, purchase prices for merchandise have increased consistently over the 15 years The company has maintained the same inventory quantities over the 15 years What is the effect of this accounting choice a The company will have to continue to use the LIFO method indefinitely because of federal income tax rules b The ending inventory amount reported on the statement of financial position may be significantly lower than its current value c The companys total net income for the past 15 years is greater than it would have reported using another method of inventory costing d The company will have paid more income taxes over the past 15 years than it would have if it had used the FIFO method of inventory costing

Question

SPI A   Co  has been in business for 15 years  During that time, the company has consistently used the LIFO method of inventory costing  Because of inflation, purchase prices for merchandise have increased consistently over the 15 years  The company has maintained the same inventory quantities over the 15 years  What is the effect of this accounting choice  a  The company will have to continue to use the LIFO method indefinitely because of federal income tax rules  b  The ending inventory amount reported on the statement of financial position may be significantly lower than its current value  c  The companys total net income for the past 15 years is greater than it would have reported using another method of inventory costing  d  The company will have paid more income taxes over the past 15 years than it would have if it had used the FIFO method of inventory costing

Accepted Answer

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	a.	The company will have to continue to use the LIFO method indefinitely because of federal income tax rules.
	b.	The ending inventory amount reported on the statement of financial position may be significantly lower than its current value.
	c.	The companys total net income for the past 15 years is greater than it would have reported using another method of inventory costing.
	d.	The company will have paid more income taxes over the past 15 years than it would have if it had used the FIFO method of inventory costing.

Question

SPI-A & Co. has been in business for 15 years. During that time, the company has consistently used the LIFO method of inventory costing. Because

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