In a period of rising prices,use of the FIFO cost flow method would cause a company to pay more income taxes than would use of LIFO.

Question

Quizplus · Accepted Answer

In a period of rising prices, FIFO will result in a higher cost of goods sold and a lower net income compared to LIFO. This results in a higher taxable income and more taxes being paid by the company when using the FIFO method. Therefore, the statement is true.

In a Period of Rising Prices,use of the FIFO Cost