Janise is a sole proprietor owning a small specialty store. the business records show that the cost of the stores individual inventory items have been steadily increasing. the cost of the end of the year inventory is 125,000 and the cost of the beginning of the year inventory was 150,000. Janis uses the lifo method of inventory valuation. which of the following statements are true?

a. Janine purchased more inventory during the year than sold during the same one year period
b. Janise would have a higher net income if she used the fifo method of inventory valuation instead of the lifo method
c Janise has apparently increased the volume of the items in her ending inventory as compared to the number of items in her beginning inventory
d. since the cost of the store inventory items is increasing Janine will have a smaller cost of goods sold amount on a lifo basis than on a fifo basis
e. none of the above

To determine which of the statements are true, we need to understand the LIFO (Last-In, First-Out) method of inventory valuation and how it impacts the financial statements.

LIFO assumes that the most recently purchased inventory items are sold first. This means that the cost of goods sold (COGS) is based on the cost of the most recent purchases, while the ending inventory is valued at the older, lower costs.

Let's analyze each statement:

a. Janise purchased more inventory during the year than sold during the same one-year period:

To determine if Janise purchased more inventory than sold, we need to compare the cost of the ending inventory to the cost of the beginning inventory.

The cost of the ending inventory is given as $125,000, and the cost of the beginning inventory is $150,000. Since the cost of the ending inventory is lower than the beginning inventory, it suggests that Janise sold more inventory than she purchased during the year.

Therefore, statement a is false.

b. Janise would have a higher net income if she used the FIFO method of inventory valuation instead of the LIFO method:

Under the FIFO (First-In, First-Out) method, the cost of goods sold is based on the older, lower-cost inventory, resulting in higher net income when prices are rising.

In this case, the cost of the ending inventory is lower than the beginning inventory, suggesting that Janise sold inventory at higher costs. If Janise used FIFO instead of LIFO, it would result in a higher cost of goods sold, which would reduce net income compared to using LIFO.

Therefore, statement b is false.

c. Janise has apparently increased the volume of the items in her ending inventory as compared to the number of items in her beginning inventory:

The information provided does not give any indication regarding the volume or quantity of items in the inventory. We only have information about the cost of the inventory, not the physical count or number of items.

Therefore, statement c is not supported by the given information.

d. Since the cost of the store inventory items is increasing, Janise will have a smaller cost of goods sold amount on a LIFO basis than on a FIFO basis:

The statement correctly reflects the impact of increasing costs on the cost of goods sold under LIFO and FIFO.

As mentioned earlier, LIFO assumes that the most recently purchased inventory items are sold first. When the cost of inventory items is increasing, using LIFO will result in a smaller cost of goods sold (reflecting the lower, older costs of inventory) compared to FIFO (where the cost of goods sold reflects the higher, recent costs).

Therefore, statement d is true.

So, based on the analysis above:

a. False
b. False
c. Not determined
d. True

The correct answer is "d".