The management of Milque Corp. is considering the effects of various inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: (a) provide the highest net income

Milque Corp.

FIFO will provide the highest net income when the price of inventory is increasing.

Explanation:

The Generally Accepted Accounting Principles recognize four main methods to compute Cost of Goods Sold and Ending Inventory for a period.  They are:

First In, First Out (FIFO): This is based on the assumption that companies sell first the inventory that they bought first.

Last In, First Out (LIFO):  This method assumes that companies sell first the inventory that they bought last.

Weighted Average Cost (WAC): This inventory method assumes that companies average the costs of inventory and how much they sell over the period by dividing the cost of goods available for sale by the total physical inventory units.

Specific Identification: This method does not make any assumptions.  It directly identifies the product being sold and prepares costing calculations based on the specific inventory items.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know