38、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

An adjustment to operating income for the effects of a change in LIFO reserves will most likely be required if the change in the  LIFO reserve is the result of:

A. price declines.

B. price increases.

C. a decrease in the number of units held in inventory.

D. an increase in the number of units held in inventory.

答案和详解如下：

38、Correct answer is C

"Analysis of Inventories," Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried

2008 Modular Level I, Vol. 3, pp. 327-331

Study Session 9-35-e

indicate the reasons that a LIFO reserve might decline during a given period and evaluate the implications of such decline for financial analysis

A liquidation of LIFO inventory produces unsustainable profit margins because old costs are being matched with current revenues.