In a period of rising costs,the last-in,first-out (LIFO)method results in a higher cost of goods sold and a lower net income than the first-in,first-out (FIFO)method.

Question

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This statement is true because the LIFO method assumes that the most recent inventory purchased or produced is sold first, while the FIFO method assumes that the oldest inventory is sold first. In a period of rising costs, the LIFO method will result in a higher cost of goods sold because the most recent and expensive inventory is sold first, leaving the cheaper, older inventory in stock. This results in a lower net income for the company because the cost of goods sold is higher. On the other hand, the FIFO method will result in a lower cost of goods sold because the cheaper, older inventory is sold first, leaving the more expensive recent inventory in stock. This results in a higher net income for the company because the cost of goods sold is lower.

In a Period of Rising Costs,the Last-In,first-Out (LIFO)method Results in a Higher