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Basic Question 15 of 16
Which of the following statements is accurate?
A. When unit costs increase, and quantities either remain constant or increase, LIFO allocates a lower amount of the total cost of goods available for sale to cost of sales on the income statement and a higher amount to ending inventory on the balance sheet. B. When unit costs increase, and quantities either remain constant or increase, FIFO allocates a lower amount of the total cost of goods available for sale to cost of sales on the income statement and a higher amount to ending inventory on the balance sheet.
C. When unit costs decrease, and quantities either remain constant or increase, FIFO allocates a lower amount of the total cost of goods available for sale to cost of sales on the income statement and a higher amount to ending inventory on the balance sheet.
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Learning Outcome Statements
calculate and explain how inflation and deflation of inventory costs affect the financial statements and ratios of companies that use different inventory valuation methods
CFA® 2024 Level I Curriculum, Volume 2, Module 6.