During a period of rising prices, the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

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During a period of rising prices, each time a firm purchases inventory, the cost of goods will increase. The last goods purchased will cost more than the first goods purchased. In this case, the FIFO technique (first-in, first-out) will result in higher net income, while the LIFO technique (last-in, first-out) will result in lower net income.

During a Period of Rising Prices, the FIFO Technique of Inventory