Which of the following statements is correct when inventory prices are decreasing?
A)Inventory turnover will be the greatest when the average cost inventory method is used.
B)FIFO's gross profit will be the highest among the inventory costing methods.
C)Inventory turnover will be the largest when the LIFO inventory method is used.
D)Use of the LIFO method will result in lower cash flows due to a decreased cost of goods sold.

Question

Quizplus · Accepted Answer

LIFO has the lowest cost of goods sold, the highest gross profit and taxable income. LIFO will therefore result in a higher tax burden and lower cash flows.

Which of the Following Statements Is Correct When Inventory Prices