When prices are falling, LIFO will result in:
A) lower income and a lower inventory valuation than will FIFO.
B) lower income and a higher inventory valuation than will FIFO.
C) higher income and a higher inventory valuation than will FIFO.
D) higher income and a lower inventory valuation than will FIFO.

Question

Quizplus · Accepted Answer

When prices are falling, LIFO will produce a low cost of goods sold (most recent purchases) and a high ending inventory (earliest purchases), compared to FIFO, which will produce a high cost of goods sold (earliest purchases) and low ending inventory (most recent purchases).

When Prices Are Falling, LIFO Will Result In