If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show lower gross profit for the period than if it had used the FIFO inventory method.

Question

Quizplus · Accepted Answer

When prices are rising, LIFO results in higher cost of goods sold and lower ending inventory values compared to FIFO, leading to lower gross profit.

If the Unit Price of Inventory Is Increasing During a Period