If inventory levels are stable or increasing an argument that favors the FIFO method as compared to LIFO is
A) Income taxes tend to be reduced in periods of rising prices
B) Cost of goods sold tends to be stated at approximately current cost in the income statement
C) Cost assignments typically parallel the physical flow of the goods
D) Income tends to be smoothed as prices change over time

Question

Quizplus · Accepted Answer

The FIFO method aligns with the physical flow of goods, as it assumes that the oldest inventory items are sold first, which is often how inventory is actually used or sold.

If Inventory Levels Are Stable or Increasing an Argument That