A drawback to using ________ when inventory costs are rising is that the company reports lower net income.
A)LIFO
B)FIFO
C)average costing
D)specific-identification costing

Question

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) assumes that the most recently purchased inventory is sold first, which results in higher costs of goods sold and lower ending inventory values. When inventory costs are rising, this method results in higher cost of goods sold, lower gross margin, and lower net income.

A Drawback to Using ________ When Inventory Costs Are Rising