Under which cost flow assumption is it the easiest for management to manipulate income?
A)LIFO.
B)FIFO.
C)Weighted average.
D)Income manipulation is not possible through any of these methods.

Question

Quizplus · Accepted Answer

LIFO assumes that the last inventory items purchased are the first ones sold. This means that during times of inflation, inventory costs are higher, leading to lower net income. However, during deflation periods, inventory costs are lower, leading to higher net income. This gives management the ability to manipulate income by choosing to use LIFO or other cost flow assumptions based on the current economic climate.

Under Which Cost Flow Assumption Is It the Easiest for Management