For Each Item Listed in 1 Through 4, Place the Letter

Essay

For each item listed in 1 through 4, place the letter of the accounting effect (a through e) in the space provided. You may use each letter more than once or not at all.
$\quad$$\quad$$\quad$$\quad$$\quad$ Accounting Effects
a. Current rat?o and earn?ngs per share increase.
b. Current ratio and earnings per share are not affected.
c. Current ratio increases and earnings per share decreases.
d. Current ratio decreases and earnings per share increases.
e. Current ratio and earnings per share decrease.

____ 1. During a period of increasing inventory and rising prices, a company decides to use FIFO instead of LIFO.
____ 2. During a period of increasing inventory and rising prices, a company decides to use Average instead of FIFO.
____ 3. During a period of static prices, a company decides to use FIFO instead of LIFO.
____ 4. A company applies lower-of-cost-or-market for valuing ending inventory when market price is less than cost.