During periods of rising inventory values,a retailer using the FIFO (first-in-first-out)method could reduce its tax liability by ________.

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The FIFO method assumes that the first items purchased are the first sold, so during periods of rising inventory values, the cost of the earlier purchased items is lower than the cost of the later purchased ones, leading to a lower cost of goods sold and higher taxable income. By switching to the LIFO (last-in-first-out) method of inventory valuation, the retailer can assume that the last items purchased are the first sold, leading to a higher cost of goods sold and lower taxable income. This can result in a reduction of the retailer's tax liability.

During Periods of Rising Inventory Values,a Retailer Using the FIFO