Which inventory costing method might allow a company to make significant inventory purchases at year-end for the purpose of manipulating income?
A)FIFO
B)LIFO
C)Specific identification
D)Weighted average cost

Question

Quizplus · Accepted Answer

LIFO assumes that the most recently purchased inventory items are sold first, so if a company makes significant inventory purchases at year-end, those items will be considered as the first ones sold in the following year, decreasing the cost of goods sold and increasing the net income. This allows companies to manipulate their income for tax or other purposes.

Which Inventory Costing Method Might Allow a Company to Make