Question

"When converting from LIFO to FIFO assuming rising prices, current assets (inventory) increase by:

a. A decreasing amount
b. A variable amount
c. A significant amount
d. A fixed percentage

Answer 1

When converting from LIFO to FIFO assuming rising prices, current assets increase by a variable amount.

Step-by-step explanation:

When converting from LIFO to FIFO assuming rising prices, current assets (inventory) increase by a variable amount. This is because FIFO assumes that the oldest items are sold first, so as inventory is converted from LIFO to FIFO, the cost of goods sold will change, and therefore the value of the remaining inventory will also change. The exact amount by which current assets increase will depend on the specific prices and quantities of the inventory.