What happens when prices are falling?
A)LIFO will result in lower net income and a lower inventory valuation than will FIFO.
B)LIFO will result in lower net income and a higher inventory valuation than will FIFO.
C)LIFO will result in higher net income and a higher inventory valuation than will FIFO.
D)LIFO will result in higher net income and a lower inventory valuation than will FIFO.

Question

Quizplus · Accepted Answer

When prices are falling,LIFO will produce a low cost of goods sold (most recent purchases)and a high ending inventory (earliest purchases),compared to FIFO,which will produce a high cost of goods sold (earliest purchases)and low ending inventory (most recent purchases).

What Happens When Prices Are Falling