Question Details

What is a LIFO reserve 


1.	In a period of falling prices, which inventory method generally provides the lowest amount of net income?
a.	Average cost.
b.	Moving average.
c.	FIFO.
d.	Specific identification.

	2.	The International Accounting Standards Board requires the specific identification method in certain circumstances. Which of the following is likely to be a circumstance where the specific identification criteria can be met?
a.	Unit price is low.
b.	Inventory turnover is low.
c.	Inventory quantities are large.
d.	All of the choices are circumstances where the criteria are likely to be met.

	3.	Homes 4 You builds single-family homes throughout the United States and Europe. The International Accounting Standards Board (IASB) Requires Homes 4 You to use which of the following cost flow assumptions for its inventory?
a.	FIFO (first-in, first-out).
b.	Specific identification.
c.	Weighted-average.
d.	The IASB allows any of these cost flow assumptions as long as the company uses it consistently. 
	4.	Oats and Honey Company produces healthy snacks for sale throughout the United States and Europe. The International Accounting Standards Board (IASB) prohibits Oats and Honey from using which of the following cost flow assumptions for its inventory?
a.	LIFO (last-in, first-out).
b.	Specific identification.
c.	Weighted-average.
d.	The IASB allows any of these cost flow assumptions as long as the company uses it consistently.

	5.	What is a LIFO reserve ?
a.	The difference between the LIFO inventory and the amount used for internal reporting purposes.
b.	The tax savings attributed to using the LIFO method.
c.	The current effect of using LIFO on net income.
d.	Change in the LIFO inventory during the year.



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