In a period of rising purchase costs, FIFO usually gives a lower taxable income and therefore, yields a tax advantage.

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In a period of rising purchase costs, FIFO (First In, First Out) usually results in a higher taxable income because the older, lower-cost items are recorded as sold first, leaving the newer, higher-cost items in inventory. This leads to higher reported profits and thus, higher taxable income compared to LIFO (Last In, First Out), which would report lower profits and thus, offer a tax advantage in such a scenario.

In a Period of Rising Purchase Costs, FIFO Usually Gives