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1> The use of the lower of cost or market method to value inventory for reporting...

1> The use of the lower of cost or market method to value inventory for reporting purposes is related to the accounting principle of:

A. verifiability

B. conservatism

C. matching

D. historical cost

2> The size of the LIFO cash flow advantage depends on all of the following EXCEPT

A. days of inventory

B. tax rate

C. severity of input cost change

D. rapidity of fixed asset turnover
business   accounting   
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Answer #1

Answer :

1. B (conservatism) In accounting, the convention of conservatism, also known as the doctrine of prudence, is a policy of anticipating possible future losses but not future gains. ... In accounting, it states that when choosing between two solutions, the one that will be least likely to overstate assets and income should be selected.

2. B (tax rate) Because tax rate doesn't have any connection with LIFO cash flow.

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