If you wish to compute economic earnings and are trying to decide how to account for inventory,______.
A) FIFO is better than LIFO
B) LIFO is better than FIFO
C) FIFO and LIFO are equally good
D) FIFO and LIFO are equally bad
E) none of these

Question

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) is better for computing economic earnings because it matches current costs with current revenues, providing a more accurate reflection of economic reality during periods of inflation.

If You Wish to Compute Economic Earnings and Are Trying