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Unformatted text preview: (c ) W hat c umulative effec t has GE's c hoic e of LIFO over FIFO had on its pretax inc ome as of
y ear end 2010?
The c umulative effec t is that pretax inc ome has not c hanged. LIFO and FIFO are s imply two
different way s to ac c ount for inventories . Both methods lead to the s ame pretax inc ome.
The c umulative effec t is that pretax inc ome has dec reas ed. LIFO matc hes more "c urrent"
inventory c os ts agains t c urrent s elling pric es , thus avoiding the rec ognition of holding gains .
The c u...
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This note was uploaded on 10/12/2013 for the course ACCT 6015 taught by Professor Satin during the Winter '09 term at CSU East Bay.
- Winter '09