Which of the following is not a disadvantage of using the FIFO cost flow assumption?
A)creates the highest outflow for income taxes during periods of rising prices
B)does not match current costs against current revenues
C)includes all the holding gains in income during periods of rising prices
D)provides a relevant ending inventory value

Question

Quizplus · Accepted Answer

The FIFO cost flow assumption provides a relevant ending inventory value, which is an advantage compared to other cost flow assumptions. A is a disadvantage because FIFO creates the highest outflow for income taxes during periods of rising prices. B is a disadvantage because FIFO does not match current costs against current revenues. C is a disadvantage because FIFO includes all the holding gains in income during periods of rising prices, which can lead to overstated income and taxes.

Which of the Following Is Not a Disadvantage of Using