A company's liquidation of inventory under LIFO results in higher income during periods of rising costs. Therefore, management can manipulate earnings by delaying purchases until after the end of the fiscal year.

Question

Quizplus · Accepted Answer

Under LIFO, older, cheaper inventory is sold first during liquidation, leading to lower cost of goods sold and higher income in periods of rising costs. Delaying purchases can extend this effect.

A Company's Liquidation of Inventory Under LIFO Results in Higher