A company experiencing rapid price increases for its products would take the most conservative approach by using
A)FIFO accounting.
B)LIFO accounting.
C)average cost accounting.
D)either FIFO or average cost accounting.

Question

Quizplus · Accepted Answer

LIFO (Last In, First Out) accounting is the most conservative approach during periods of rapid price increases because it matches the most recent, higher costs with current revenues, resulting in lower taxable income and higher cost of goods sold.

A Company Experiencing Rapid Price Increases for Its Products Would