During inflationary periods, the use of the LIFO method of costing inventory will result in a lesser amount of net income than would result from the use of the average method of inventory costing.

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During inflationary periods, LIFO (last-in, first-out) method of inventory costing assumes that the most recently purchased items are sold first, while the older, lower-priced items remain in inventory. This results in a higher cost of goods sold and a lower ending inventory, which in turn results in a lesser amount of net income compared to the average method of inventory costing.

During Inflationary Periods, the Use of the LIFO Method of Costing