When prices and costs are rising,most companies that use LIFO

Question

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When prices and costs are rising, companies that use the Last In, First Out (LIFO) inventory method often report lower inventory values compared to the First In, First Out (FIFO) method. This is because LIFO assumes the most recently acquired items are sold first, which, during inflation, means higher costs of goods sold and lower ending inventory values. However, to provide transparency and allow for comparison, these companies report their LIFO reserve, which is the difference between the inventory reported under LIFO and what it would have been under FIFO. This information is typically disclosed on the balance sheet or in the footnotes to the financial statements.

When Prices and Costs Are Rising,most Companies That Use LIFO