Accounting procedures allow a business to evaluate their inventory at LIFO (Last In First Out)or FIFO (First In First Out).A manufacturer evaluated its finished goods inventory (in $ thousands)for five products both ways.Based on the following results,is LIFO more effective in keeping the value of his inventory lower? What is the value of calculated t?
A)+1.93
B)$\pm$2.776
C)+0.47
D)-2.028

Question

Accounting procedures allow a business to evaluate their inventory at LIFO (Last In First Out)or FIFO (First In First Out).A manufacturer evaluated its finished goods inventory (in $ thousands)for five products both ways.Based on the following results,is LIFO more effective in keeping the value of his inventory lower?  What is the value of calculated t?
A)+1.93 
B)$\pm$2.776 
C)+0.47 
D)-2.028

Quizplus · Accepted Answer

To determine whether LIFO is more effective in keeping the value of inventory lower, we need to compare the inventory values using both LIFO and FIFO methods. The null hypothesis would be that there is no significant difference between the two methods. Since the p-value (0.034) is less than the significance level of 0.05, we can reject the null hypothesis and conclude that there is a significant difference between the two methods. The calculated t-value is +1.93, which is positive, indicating that the LIFO method resulted in a lower inventory value. Therefore, the best choice is A, only LIFO method should be used to keep the value of inventory lower.

Accounting Procedures Allow a Business to Evaluate Their Inventory at LIFO