With respect to LIFO, which of the following is incorrect?
A)If a company uses LIFO for tax purposes, it must use it for GAAP purposes.
B)If the LIFO reserve increases in a given year, cost of goods sold under the LIFO inventory costing is higher than it would have been if FIFO had been used for that year.
C)LIFO results in better matching on the income statement than FIFO.
D)LIFO results in inventory levels on the balance sheet that are closer to current cost than FIFO.

Question

Quizplus · Accepted Answer

LIFO (Last In, First Out) often results in older inventory costs being reported on the balance sheet, whereas FIFO (First In, First Out) results in inventory levels that are closer to current cost. This is because LIFO assumes the most recently acquired items are sold first, leaving older items in inventory.

With Respect to LIFO, Which of the Following Is Incorrect