Given equal circumstances and generally rising costs, which inventory method will increase the tax expense the most?
A)FIFO
B)LIFO
C)Average cost
D)Income tax expense for the period will be the same under all assumptions.

Question

Quizplus · Accepted Answer

Under rising costs, FIFO (First-In, First-Out) results in lower cost of goods sold and higher ending inventory values, leading to higher taxable income and thus higher tax expense.

Given Equal Circumstances and Generally Rising Costs, Which Inventory Method