Which of the following would not be a reasonable conclusion when comparing lifo-fifo under an inflationary condition?
A) Lifo generally results in a lower profit than does fifo.
B) Fifo reports a higher inventory ending balance.
C) Lifo results in a lower profit figure than does fifo.
D) Lifo would probably be used for inventory that has a high turnover rate because there would be an immaterial difference in the results between lifo and fifo.
E) The cash flow under lifo is greater than the cash flow under fifo by the difference in the resulting tax between the two methods.

Question

Quizplus · Accepted Answer

Under inflationary conditions, LIFO is typically used for inventory with slower turnover to match current costs with current revenues, not high turnover, as the difference between LIFO and FIFO would be more material.

Which of the Following Would Not Be a Reasonable Conclusion