LIFO is the preferred inventory costing method when costs are rising and managers have incentives to report higher income.The reasons for doing this is for a bonus plan,job security and reputation.

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LIFO (Last-In, First-Out) results in higher cost of goods sold and lower net income when costs are rising, which is not preferred if managers want to report higher income for bonuses or reputation.

LIFO Is the Preferred Inventory Costing Method When Costs Are