Why would a company switch to the LIFO method of inventory valuation? (a) By switching to LIFO,

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Why would a company switch to the LIFO method of inventory valuation?

(a) By switching to LIFO, reported earnings will be higher.

(b) A new tax law requires companies using LIFO for reporting purposes also to use LIFO for figuring taxable income.

(c) LIFO produces the largest cost of goods sold expense in a period of inflation and thereby lowers taxable income and taxes.

(d) A survey by Accounting Trends and Techniques revealed that the switch to LIFO is a current accounting “fad.”

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Understanding Financial Statements

ISBN: 9780138114404

12th Edition

Authors: Lyn Fraser, Aileen Ormiston

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Question Posted: Apr 03, 2024 01:01 AM

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Why would a company switch to the LIFO method of inventory valuation? (a) By switching to LIFO,

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Understanding Financial Statements

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