Emley Company has been using the average cost method of inventory valuation for 10 years, since it began operations. Its 2019 ending inventory was $40,000, but it would have been $60,000 if FIFO had been used. Thus, if FIFO had been used, Emley's income before income taxes would have been Select one: a. $20,000 greater in 2019. b. $20,000 less over the 10-year period. c. $20,000 greater over the 10-year period. d. $20,000 less in 2019.
Emley Company has been using the average cost method of inventory valuation for 10 years, since it began operations. Its 2019 ending inventory was $40,000, but it would have been $60,000 if FIFO had been used. Thus, if FIFO had been used, Emley's income before income taxes would have been Select one: a. $20,000 greater in 2019. b. $20,000 less over the 10-year period. c. $20,000 greater over the 10-year period. d. $20,000 less in 2019.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Emley Company has been using the average cost method of inventory valuation for 10 years, since it began operations. Its 2019 ending inventory was $40,000, but it would have been $60,000 if FIFO had been used. Thus, if FIFO had been used, Emley's income before income taxes would have been Select one:
a. $20,000 greater in 2019.
b. $20,000 less over the 10-year period.
c. $20,000 greater over the 10-year period.
d. $20,000 less in 2019.
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