When inventory prices are rising,all of the following are reasons for choosing the LIFO method versus the FIFO method except:
A)LIFO generally results in lower income taxes paid.
B)LIFO uses more current costs in calculating cost of goods sold.
C)LIFO permits management to influence income by the timing of inventory purchases.
D)LIFO reports the most up-to-date inventory values on the balance sheet.
E)None of the above is correct.

Question

Quizplus · Accepted Answer

When inventory prices are rising, using LIFO method will result in lower income taxes paid as it matches higher cost of goods sold with higher prices. LIFO also uses more current costs in calculating cost of goods sold. However, it does not report the most up-to-date inventory values on the balance sheet. Additionally, LIFO does not permit management to influence income by the timing of inventory purchases, as it is determined by the order in which goods are sold.

When Inventory Prices Are Rising,all of the Following Are Reasons