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Which one of the following statements is INCORRECT?

Which one of the following statements is INCORRECT?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The accounting records of Summer Lightings Equipment Ltd show the following data: Beginning inventory: 4,000 units at £3 Purchases 6,000 units at £4 Sales 7,000 units at £12 Which one of the following statements is INCORRECT? O In a period of inflation. FIFO produces a lower net profit because the higher unit costs of the first units purchased are matched against revenues; and results in a lower income taxes paid. In a period of inflation, FIFO produces a higher net profit because the lower unit costs of the first units purchased are matched against revenues, and results in a higher income taxes paid, O The cost of goods sold during the period under a periodic inventery system using the average-cost method is C25,200. The cost of goods sold during the period under a periodic inventory system using the FIFO method is [24,000.
Transcribed Image Text:The accounting records of Summer Lightings Equipment Ltd show the following data: Beginning inventory: 4,000 units at £3 Purchases 6,000 units at £4 Sales 7,000 units at £12 Which one of the following statements is INCORRECT? O In a period of inflation. FIFO produces a lower net profit because the higher unit costs of the first units purchased are matched against revenues; and results in a lower income taxes paid. In a period of inflation, FIFO produces a higher net profit because the lower unit costs of the first units purchased are matched against revenues, and results in a higher income taxes paid, O The cost of goods sold during the period under a periodic inventery system using the average-cost method is C25,200. The cost of goods sold during the period under a periodic inventory system using the FIFO method is [24,000.
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