QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

63. Assume U.S. GAAP (generally accepted accounting principles) applies unless

otherwise noted.

A company uses the LIFO inventory method, but most of the other companies in

the same industry use FIFO. Which of the following best describes one of the

adjustments that would be made to the company’s financial statements to compare

it with other companies in the industry? The amount reported for the company’s

ending inventory should be:

A. increased by the ending balance in its LIFO reserve.

B. decreased by the ending balance in its LIFO reserve.

C. increased by the change in its LIFO reserve for that period.

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