A firm has used LIFO for several years during which costs have trended higher.The effect on 2020 net income using LIFO, relative to FIFO, will be:
A)net income for 2020 will be greater under LIFO than FIFO.
B)net income for 2020 will be less under LIFO than FIFO.
C)net income for 2020 will be the same under LIFO as under FIFO.
D)impossible to determine from the information given.

Question

Quizplus · Accepted Answer

Under LIFO, the most recent, higher-cost inventory is expensed first, leading to higher cost of goods sold and lower net income compared to FIFO when costs are rising.

A Firm Has Used LIFO for Several Years During Which