mengxu

1. i think the only component affecting the I.S. is COGS, which is an expense.

COGS FIFO adjustment is: COGS_L - Change_LIFO_reserve

So, if lifo reserve is increasing (as would be expected), you're COGS decreases by CH_LIFO_res, which would mean your net income increases by (1-t)*(CH_LIFO_res).

2. If it is two-tailed, you take alpha/2 when looking up the critical value. Whenever the null hypothesis is something = something, like b = 0, this results in two tails since it is invalid in either direction. I think all tests but the F-test for this curriculum use two-tails since you are testing significance. IF a value = 0, it's insignificant, so we want to make sure we're far enough from 0 to be significant.

help?