{"id":46532,"date":"2024-04-15T22:13:42","date_gmt":"2024-04-15T22:13:42","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=46532"},"modified":"2024-04-15T22:13:42","modified_gmt":"2024-04-15T22:13:42","slug":"statement-a-it-is-necessary-to-tally-current-costs-with-current-income-in-order-to-find-out-the-correct-profit-reason-r-lifo-ensures-matching-of-current-costs-with-current-income","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/statement-a-it-is-necessary-to-tally-current-costs-with-current-income-in-order-to-find-out-the-correct-profit-reason-r-lifo-ensures-matching-of-current-costs-with-current-income\/","title":{"rendered":"Statement (A): It is necessary to tally current costs with current income in order to find out the correct profit. Reason (R): LIFO ensures matching of current costs with current income."},"content":{"rendered":"

[amp_mcq option1=”Both A and R are correct and R is the correct explanation of A” option2=”Both A and R are correct but R is not the correct explanation of A” option3=”A is correct but R is incorrect” option4=”A is incorrect but R is correct” correct=”option1″]<\/p>\n

The correct answer is: A. Both A and R are correct and R is the correct explanation of A.<\/p>\n

Statement A is correct because matching current costs with current income is a fundamental principle of accounting. This principle ensures that the profit reported in the financial statements is a fair representation of the company’s performance during the period.<\/p>\n

Reason R is also correct because LIFO is an inventory costing method that matches the cost of the most recently acquired inventory items with the revenue from the most recently sold inventory items. This results in a more accurate matching of costs and revenues than other inventory costing methods, such as FIFO.<\/p>\n

Therefore, both A and R are correct and R is the correct explanation of A.<\/p>\n

Here is a brief explanation of each option:<\/p>\n