A firm utilizing LIFO inventory accounting would, in calculating gross profits, assume that
A) all sales were from current production.
B) all sales were from beginning inventory.
C) sales were from current production until current production was depleted, and then use sales from beginning inventory.
D) all sales were for cash.

Question

Quizplus · Accepted Answer

LIFO (last-in, first-out) inventory accounting assumes that the most recently purchased inventory items are sold first. Therefore, in calculating gross profits, a firm utilizing LIFO would assume that sales were from current production until the current production was depleted, and then use sales from beginning inventory. This is because the beginning inventory consists of older inventory items that were purchased at lower prices, and using those sales for inventory accounting purposes would result in a lower cost of goods sold and a higher gross profit.

A Firm Utilizing LIFO Inventory Accounting Would, in Calculating Gross