1. Using the dollar-value LIFO retail method for inventory,:

a) Is the same as dollar-value LIFO, except that the inventory is measured at retail, rather than at cost.

b) Combines retail LIFO accounting with dollar-value LIFO accounting

c) Allows companies to report inventory on the balance sheet at retail prices.

d) All of the above are correct.

2. The use of LIFO during a long inflationary period can result in:

a) A net increase in income tax expense.

b) An inflated balance sheet.

c) Significant cash flow advantages over FIFO.

d) A reduction in inventory turnover over FIFO.

3. In a periodic inventory system, the cost of inventories sold is:

a) Debited to accounts receivable.

b) Credited to cost of goods sold.

c) Debited to cost of goods sold.

d) Not recorded at the time of sale.

4. In determining the cost-to-retail percentage for the current year,:

a) Net markups are included.

b) Net markdowns are excluded.

c) Net sales are included.

d) All of the above are correct.

5. When reported in financial statements, a LIFO Allowance account usually:

a) Is shown in the firm's income statement.

b) Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis.

c) Indicates the effect on income if LIFO were not used.

d) Shows the current rate of inflation for that asset. SOLUTION