Because LIFO uses older costs for inventory,in times of rising prices:
A)LIFO results in a higher book value of inventory and lower inventory turnover ratio than FIFO.
B)LIFO results in a lower book value of inventory and lower inventory turnover ratio than FIFO.
C)LIFO results in a higher book value of inventory and higher inventory turnover ratio than FIFO.
D)LIFO results in a lower book value of inventory and higher inventory turnover ratio than FIFO.

Question

Quizplus · Accepted Answer

LIFO uses newer costs for COGS, resulting in lower ending inventory and a lower book value. This also leads to a higher inventory turnover ratio as the inventory is being sold at a faster rate. Therefore, the correct choice is D.

Because LIFO Uses Older Costs for Inventory,in Times of Rising