During periods of rapidly rising costs, the use of the LIFO method results in illusory or inventory profits.

Question

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During periods of rapidly rising costs, the use of the LIFO (Last In, First Out) method results in higher cost of goods sold and lower ending inventory values, which can lead to lower reported profits, not illusory or inventory profits. This is because the most recent, higher-cost inventory items are considered sold first.

During Periods of Rapidly Rising Costs, the Use of the LIFO