During periods of rising inventory costs,LIFO cost of goods sold is understated because of the inventory holding gains that have occurred during the period.

Question

Quizplus · Accepted Answer

During periods of rising inventory costs, LIFO (Last In, First Out) cost of goods sold is overstated, not understated, because the most recently acquired (and thus more expensive) inventory items are sold first, reflecting the higher current market costs in the cost of goods sold.

During Periods of Rising Inventory Costs,LIFO Cost of Goods Sold