During the current year,ending inventory was higher under the LIFO method than under the FIFO method.Which of the following statements about price changes is true?
A)Prices were unchanged.
B)Prices were decreasing.
C)Prices were increasing.
D)Unable to determine from the information given

Question

Quizplus · Accepted Answer

When ending inventory is higher under the LIFO method than under the FIFO method, it indicates that prices were decreasing. This is because LIFO (Last In, First Out) assumes that the most recently acquired items are sold first, so if prices are decreasing, the older, higher-cost items remain in inventory, leading to a higher inventory valuation compared to FIFO (First In, First Out), which assumes the first items purchased are sold first.

During the Current Year,ending Inventory Was Higher Under the LIFO