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Match Each Item Listed with the Accounting Effect You May

Question 115

Matching

match each item listed with the accounting effect You may use each choice more than once or not at all.

Premises:
During a period of increasing inventory and rising prices, a company decides to use FIFO instead of LIFO.
During a period of increasing inventory and rising prices, a company decides to use Average instead of FIFO.
During a period of static prices, a company decides to use FIFO instead of LIFO.
A company applies lower-of-cost-or-market for valuing ending inventory when market price is less than cost.
Responses:
Current ratio and earnings per share increase.
Current ratio and earnings per share are not affected.
Current ratio increases and earnings per share decreases.
Current ratio decreases and earnings per share increases.
Current ratio and earnings per share decrease.

Correct Answer:

Current ratio and earnings per share increase.
Current ratio and earnings per share are not affected.
Current ratio increases and earnings per share decreases.
Current ratio decreases and earnings per share increases.
Current ratio and earnings per share decrease.
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