In a period of inflation the cost flow method that results in the lowest income taxes is the
A) FIFO method.
B) LIFO method.
C) average-cost method.
D) gross profit method.

Question

Quizplus · Accepted Answer

During inflation, the Last In, First Out (LIFO) method results in the lowest income taxes because it matches the most recent (and typically higher) costs against current revenues, leading to lower reported profits and thus lower taxes.

In a Period of Inflation the Cost Flow Method That