In times of falling prices, choosing LIFO over FIFO as an inventory cost method would affect the financial statements as follows:
A) Cost of goods sold will be higher and ending inventory will be lower
B) Cost of goods sold will be lower and ending inventory will be lower
C) Cost of goods sold will be higher and ending inventory will be higher
D) Cost of goods sold will be lower and ending inventory will be higher
E) None of the above

Question

Quizplus · Accepted Answer

In times of falling prices, LIFO results in lower cost of goods sold because older, higher-cost inventory is sold first, and ending inventory is higher because it consists of more recent, lower-cost items.

In Times of Falling Prices, Choosing LIFO Over FIFO as an Inventory