Titan Company changed its inventory cost flow assumption from FIFO to LIFO in a period of rising prices.What was the result of the change on net income in the year of the change?
A)increased net income
B)decreased net income
C)no change in net income
D)cannot determine from the information provided

Question

Quizplus · Accepted Answer

In a period of rising prices, changing from FIFO to LIFO would mean that the cost of goods sold would increase, as the newer, more expensive inventory would be sold first. This would lead to a decrease in net income due to higher COGS expenses.

Titan Company Changed Its Inventory Cost Flow Assumption from FIFO