During a year of decreasing prices and decreasing inventory, which cost flow assumption would measure the greatest net income?

Name: During a year of decreasing prices and decreasing inventory, which cost flow assumption would measure the greatest net income?
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Question

Quizplus · Accepted Answer

During a year of decreasing prices and decreasing inventory, LIFO would measure the greatest net income because it matches the most recent costs (which are lower) to the goods sold, resulting in a higher cost of goods sold and a lower net income.

During a Year of Decreasing Prices and Decreasing Inventory, Which