During inflationary periods,the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

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During inflation, FIFO (First-In, First-Out) results in lower cost of goods sold and higher net income because older, cheaper inventory costs are matched against current revenues, unlike LIFO (Last-In, First-Out) which uses more recent, higher costs.

During Inflationary Periods,the Use of the FIFO Method of Costing