Accounting procedures allow a business to evaluate its inventory costs based on

Question

Accounting procedures allow a business to evaluate its inventory costs based on two methods: LIFO (last in first out) or FIFO (first in first out). A manufacturer evaluated its finished goods inventory (in $000s) for five products with the LIFO and FIFO methods. To analyze the difference, they computed FIFO LIFO for each product. Based on the following results, does the LIFO method result in a lower cost of inventory than the FIFO method?

This example is what type of test?

Multiple Choice

A test of proportions

A two-sample test of means

A paired t-test

A one-sample test of means

Explanation / Answer

Both the observations FIFO & LIFO both are taken on the same product

It means sample FIFO & LIFO are not independent,they are correlated or paired

so this example is of paired t-test

Answer is " A paired t-test"

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