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? This example is what type of test?
A)One sample test of means.
B)Two sample test of means.
C)Paired t-test.
D)Test of proportions.

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?  This example is what type of test?
A)One sample test of means. 
B)Two sample test of means. 
C)Paired t-test. 
D)Test of proportions.

Quizplus · Accepted Answer

This is a paired t-test because the same inventory for each product is evaluated using two different accounting procedures (LIFO and FIFO). The paired t-test will determine if there is a significant difference between the two evaluation methods. A one sample test of means or test of proportions would not be appropriate in this scenario. A two sample test of means would only be used if two different manufacturers were being compared.

Accounting Procedures Allow a Business to Evaluate Their Inventory at LIFO