In a period of rising prices,the inventory costing method that will cause the company to have the lowest income taxes is
A)LIFO.
B)FIFO.
C)Weighted average.
D)Specific identification.

Question

Quizplus · Accepted Answer

LIFO (last-in, first-out) is a method of inventory costing where the most recently purchased or produced inventory is sold first. In a period of rising prices, using LIFO will result in a higher cost of goods sold, which in turn will result in a lower taxable income and therefore lower income taxes. Therefore, using LIFO will cause the company to have the lowest income taxes in this scenario.

In a Period of Rising Prices,the Inventory Costing Method That