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On December 31, 2013, Gifts Galore, Inc. appropriately changed its inventory valuation method from weighted-average cost to FIFO method for financial statement and income tax purposes. The change will result in a $3,600,000 increase in the beginning inventory at January 1, 2013. Assume a 35% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is:

a) $0.

b) $1,260,000.

c) $3,600,000.

d) $2,340,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M948623

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