Question
the management of Otto Corp. is considering the effects of various inventory costing methods on its financial statements and its income tax expense. Assuming that
the management of Otto Corp. is considering the effects of various inventory costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing. 1. Which method will result in the lowest income tax expense?
select a method FIFOAverage Cost MethodLIFO | method will result in the lowest income tax expense. |
2. Which method will provide the highest net income?
select a method LIFOFIFOAverage Cost Method | method will provide the highest net income. |
3. Which method will provide the highest ending inventory?
select a method LIFOFIFOAverage Cost Method | method will provide the highest ending inventory. |
4. Which method will result in the most stable earnings over a number of years?
select a method Average Cost MethodFIFOLIFO | will result in the most stable earnings over a number of years. |
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