Which of the following combinations of accounting practices will lead to the highest reported earnings in an inflationary environment? $$\begin{array} { | l | l | c | }
\hline & { \text { Depreciation Method } } & \text { Inventory Method } \
\hline \text { A) } & \text { Straight-line } & \text { LIFO } \
\hline \text { B) } & \text { Double-declining balance } & \text { LIFO } \
\hline \text { C) } & \text { Straight-line } & \text { FIFO } \
\hline \text { D) } & \text { Double-declining balance } & \text { FIFO } \
\hline
\end{array}$$
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question

Which of the following combinations of accounting practices will lead to the highest reported earnings in an inflationary environment? $$\begin{array} { | l | l | c | } 
\hline & { \text { Depreciation Method } } & \text { Inventory Method } \
\hline \text { A) } & \text { Straight-line } & \text { LIFO } \
\hline \text { B) } & \text { Double-declining balance } & \text { LIFO } \
\hline \text { C) } & \text { Straight-line } & \text { FIFO } \
\hline \text { D) } & \text { Double-declining balance } & \text { FIFO } \
\hline
\end{array}$$
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Quizplus · Accepted Answer

Straight-line depreciation results in lower depreciation expenses in the early years compared to double-declining balance, and FIFO (First-In, First-Out) results in lower cost of goods sold in an inflationary environment, leading to higher reported earnings.

Which of the Following Combinations of Accounting Practices Will Lead