In periods of inflation, phantom or paper profits may be reported as a result of using the

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Phantom or paper profits can occur during periods of inflation when the FIFO (First-In, First-Out) costing assumption is used. This is because FIFO assumes that the oldest inventory items are sold first, potentially leading to reported profits that are higher than actual economic gains, as the cost of goods sold (COGS) may be based on historically lower prices.

In Periods of Inflation, Phantom or Paper Profits May Be