As a firm liquidates old LIFO layers of inventory,the lower costs of the LIFO layers are matched against current sales dollars resulting in a profit margin that is

Question

Quizplus · Accepted Answer

Liquidating old LIFO layers of inventory results in matching the lower costs of those layers against current sales dollars. This results in a higher profit margin or inflated profit as compared to using newer, higher costs under LIFO. Therefore, the correct choice is A) inflated.

As a Firm Liquidates Old LIFO Layers of Inventory,the Lower