Q1. A U.S. company uses the LIFO method to value its inventory for their income tax return. For its financial statements prepared for

    shareholders, the company may:

A)   use any other inventory method under generally accepted accounting principles (GAAP).

B)   only use the LIFO method.

C)   use the FIFO method, but must disclose a LIFO reserve.

Q2. Which of the following statements regarding first in, first out (FIFO) is least accurate?

A)   Ending inventory consists of the cost of the most recent purchases.

B)   Items sold are a mix of the cost of the purchases.

C)   Cost of goods sold consists of the costs of the first purchases.

答案和详解如下：

Q1. A U.S. company uses the LIFO method to value its inventory for their income tax return. For its financial statements prepared for

    shareholders, the company may:

A)   use any other inventory method under generally accepted accounting principles (GAAP).

B)   only use the LIFO method.

C)   use the FIFO method, but must disclose a LIFO reserve.

Correct answer is B)         

The LIFO conformity rule in the U.S. requires firms to use LIFO for their financial statements if they use LIFO for income tax purposes.

Q2. Which of the following statements regarding first in, first out (FIFO) is least accurate?

A)   Ending inventory consists of the cost of the most recent purchases.

B)   Items sold are a mix of the cost of the purchases.

C)   Cost of goods sold consists of the costs of the first purchases.

Correct answer is B)         

With FIFO the cost of the items sold are the first purchased, with LIFO the cost of the items last purchased represent the first to be sold, and with the weighted average cost method the cost of the items sold are a mix of purchases.

thx

谢谢了

CB