If a company uses LIFO, a LIFO liquidation causes a company's income taxes to increase:
A) When inventory purchase costs are rising.
B) When inventory purchase costs are declining.
C) Whether inventory purchase costs are declining or rising.
D) LIFO liquidations have no effect on a company's income taxes.

Question

Quizplus · Accepted Answer

When costs are rising, a liquidation causes pre-tax income to rise and thus income taxes to rise.

If a Company Uses LIFO, a LIFO Liquidation Causes a Company's