Reference no: EM132803336

Problem 1: When the cost of purchasing inventory is declining, Which inventory cost flow method will produce the highest amount of cost of goods sold?

A.) Weighted-average

B.) LIFO

C.) FIFO

D.) LIFO, FIFO and Weighted-average will all produce the same amount of cost of goods sold.

Problem 2: What happens when a company is operating in an inflationary environment?

A.)The company's net incomes will be higher if it uses LIFO than if it uses FIFO

B.)The company's cost of goods sold will be lower if it uses LIFO as opposed to FIFO

C.) The company's net income will be the same regardless of whether LIFO or FIFO is used

D.)The company's assets will be lower if it uses LIFO as opposed to FIFO cost flow.