A LIFO liquidation during periods when prices are increasing results in a company:
A) recording a large inventory write down.
B) recording higher earnings than it would have if it had used FIFO.
C) recording lower earnings than it would have if it had used FIFO.
D) having operational s,but no financial statement effects.

Question

Quizplus · Accepted Answer

A LIFO liquidation occurs when older, lower-cost inventory is sold, leading to higher reported earnings compared to FIFO, especially when prices are rising.

A LIFO Liquidation During Periods When Prices Are Increasing Results