Question：
　　Globetrade is a retailer that buys virtually all of its merchandise from manufacturers in a country experiencing significant inflation. Globetrade is considering changing its method of inventory costing from first-in, first-out (FIFO) to last-in, first-out (LIFO).
　　What effect would the change from FIFO to LIFO have on Globetrade’s current ratio and inventory turnover ratio?
　　A. Both the current ratio and the inventory turnover ratio would decrease.
　　B. The current ratio would decrease but the inventory turnover ratio would increase.
　　C. Both the current ratio and the inventory turnover ratio would increase.
　　D. The current ratio would increase but the inventory turnover ratio would decrease.
　　Answer（B）：
　　Answer (A) is incorrect. The inventory turnover would increase due to higher cost of goods sold and lower inventory.
　　Answer (B) is correct. During periods of high inflation, manufacturers and retailers often switch to LIFO inventory valuation as a tax postponement tool.
　　The higher costs attaching to more recent inventory pass into cost of goods sold, reducing net income and tax liability. Since cost of goods sold is the numerator of the inventory turnover ratio, turnover will increase. Also, inventory will be lower under LIFO, which reduces the current ratio and increases the turnover ratio.
　　Answer (C) is incorrect. The current ratio would decrease due to the lower inventory value under LIFO.
　　Answer (D) is incorrect. The current ratio would decrease due to the lower inventory value under LIFO.
網(wǎng)校二維碼
掃一掃微信，*9時(shí)間關(guān)注CMA考試時(shí)間提醒

        高頓網(wǎng)校特別提醒：已經(jīng)報(bào)名2014年CMA考試的考生可按照復(fù)習(xí)計(jì)劃有效進(jìn)行！另外，高頓網(wǎng)校2014年CMA考試輔導(dǎo)高清課程已經(jīng)開通，通過針對(duì)性地講解、訓(xùn)練、答疑，對(duì)學(xué)習(xí)過程進(jìn)行全程跟蹤、分析、指導(dǎo)，可以幫助考生全面提升備考效果。
 
　　報(bào)考指南： 2014年CMA考試報(bào)考指南 
　　考前沖刺：CMA考試試題   考試輔導(dǎo)
        免費(fèi)題庫：CMA題庫   題庫APP