An analyst can most accurately identify a LIFO liquidation by observing a（n):A. incre

Which inventory method best matches the actual historical cost of the inventory sold with their physical flow if a company is using a perpetual inventory system?

A. FIFO.

B. LIFO.

C. specific identification.

The year-end balances in a company’s LIFO reserve are $56.8 million in the company’s financial statements for both 2007 and 2008. For 2008, the measure that will most likely be the same regardless of whether the company uses the LIFO or FIFO inventory method is the:

A. inventory turnover.

B. gross profit margin.

C. amount of working capital.

A company using the LIFO inventory method reports a LIFO reserve at year-end of $85,000, which is $20,000 lower than the prior year. If the company had used FIFO instead of LIFO in that year, the company’s financial statements would have reported:

A. a lower cost of goods sold, but a higher inventory balance.

B. a higher cost of goods sold, but a lower inventory balance.

C. both a higher cost of goods sold and a higher inventory balance.

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.