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Exam Code: CTFL-MAT

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NEW QUESTION: 1
A firm using LIFO accounting has a LIFO reserve of 600, with a LIFO ending inventory of 4,900. It is currently in the 40% tax bracket. If it switches to FIFO accounting, it's equity ________.
A. decreases by 360
B. increases by 240
C. increases by 360
D. decreases by 240
Answer: C
Explanation:
Explanation/Reference:
Explanation:
The presence of a LIFO reserve implies that by following LIFO, the firm has been able to deduct higher COGS from gross income than under FIFO (remember that LIFO reserve equals inventory value under FIFO minus inventory value under LIFO and this will be positive when the COGS under FIFO is lower than that under LIFO). thus, the retained earnings (and hence equity) is understated by LIFO Reserve*(1 - tax rate). Therefore, when the firm switches from LIFO to FIFO, the equity is increased by 600*(1 - 0.4) = 360.

NEW QUESTION: 2
Where can the statistical grouping settings in an advanced search be updated?
A. Statistical grouping settings cannot be updated after initial creation
B. From the Search Results pages
C. From the Advanced Search and Search Results pages
D. From the Advanced Search page
Answer: B


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