For Each Item Listed in 1 Through 2, Place the Letter

Essay

For each item listed in 1 through 2, 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 ratio and earnings per share increase.
b. Current ratio and earnings per share decrease.
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 are not affected.
____ 1. A company applies lower-of-cost-or-market for valuing ending inventory when cost is greater than market price.
____ 2. During an extended period of constant prices, a company uses LIFO instead of FIFO.