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.
A. Both A and R are correct and R is the correct explanation of A
B. Both A and R are correct but R is not the correct explanation of A
C. A is correct but R is incorrect
D. A is incorrect but R is correct
Answer: Option B
Related Questions on Costing
Basic objective of cost accounting is ________
A. tax compliance.
B. financial audit.
C. cost ascertainment.
D. profit analysis.
Process costing is suitable for ________.
A. hospitals
B. oil refing firms
C. transport firms
D. brick laying firms
The cost which is to be incurred even when a business unit is closed is a _____.
A. imputed cost
B. historical cost
C. sunk cost
D. shutdown cost
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