A firm has used LIFO for several years during which costs have trended higher. The effect on 2017 net income using LIFO, relative to FIFO, will be:
A) net income for 2017 will be greater under LIFO than FIFO.
B) net income for 2017 will be less under LIFO than FIFO.
C) net income for 2017 will be the same under LIFO as under FIFO.
D)can't tell from the information given.

Question

Quizplus · Accepted Answer

Since costs have trended higher, using LIFO will result in higher cost of goods sold (COGS) and lower ending inventory compared to FIFO. This will result in lower net income for 2017 under LIFO than FIFO.

A Firm Has Used LIFO for Several Years During Which