In a period of rising prices,the liquidation of base-layer inventory will result in an unusually high income tax liability under which of the following methods?
A)Specific identification
B)Average-cost
C)LIFO
D)FIFO

Question

Quizplus · Accepted Answer

Under LIFO (Last-In, First-Out), the liquidation of older, lower-cost inventory layers during a period of rising prices results in higher taxable income, as the cost of goods sold is lower, leading to a higher income tax liability.

In a Period of Rising Prices,the Liquidation of Base-Layer Inventory