Which one of the following is an advantage of LIFO?
A)In periods of rising prices, less income taxes are paid.
B)In periods of rising prices, more holding gains are reported in net income.
C)Record keeping and financial statement preparation are easier.
D)Conservative income statements and balance sheet disclosures result from falling prices.

Question

Quizplus · Accepted Answer

LIFO assumes that the last items purchased are the first ones sold, resulting in higher cost of goods sold and lower ending inventory balance. In a period of rising prices, this results in lower taxable income as the cost of goods sold is higher, leading to lower income taxes paid.

Which One of the Following Is an Advantage of LIFO