During periods of inflation, the use of FIFO (rather than LIFO) as the method of accounting for inventories causes
A)higher reported sales.
B)higher incomes taxes.
C)lower ending inventory.
D)higher incomes taxes and lower ending inventory.

Question

Quizplus · Accepted Answer

During periods of inflation, using FIFO (First In, First Out) results in higher reported profits because the older, lower-cost inventory is used up first, leading to higher income before taxes and consequently higher income taxes.

During Periods of Inflation, the Use of FIFO (Rather Than