When a company has inventory which is subject to gradually increasing prices,the use of the LIFO method of valuing inventory will result in the:
A)highest amount of assets and the lowest amount of net income.
B)highest amount of assets and the highest amount of net income.
C)lowest amount of assets and the highest amount of net income.
D)lowest amount of assets and the lowest amount of net income.

Question

Quizplus · Accepted Answer

When prices are rising,the LIFO method assigns higher costs to Cost of Goods Sold and lower costs to Inventory than other inventory costing methods.If Costs of Goods Sold is higher,net income is lower.

When a Company Has Inventory Which Is Subject to Gradually