When a firm uses the LIFO inventory cost flow assumption:
A)ending inventory will be greater than if FIFO were used.
B)net income will be greater than if FIFO were used.
C)cost of goods sold will be the same as if FIFO were used.
D)better matching of revenue and expense is achieved than under FIFO.

Question

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) results in a better matching of current costs with current revenues, as the most recent costs are matched against current sales, which is generally considered a better reflection of the cost of goods sold in periods of rising prices.

When a Firm Uses the LIFO Inventory Cost Flow Assumption