To Determine If an Increase in the Dollar Value of Inventory

Multiple Choice

To determine if an increase in the dollar value of inventory is due to increased quantities, using dollar-value LIFO retail:

A) Compare beginning and ending inventory amounts at current year prices.
B) Compare beginning and ending inventory amounts after adjusting both amounts to the average price level for the year.
C) Inflate beginning inventory amount to end of year prices and compare to ending inventory amount.
D) Deflate the ending inventory amount to beginning of year prices and compare to the beginning inventory amount.