One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost flow assumption in an inflationary economic environment is that:
A)net income will be higher.
B)income taxes will be lower.
C)balance sheet inventory values will be higher.
D)a higher selling price can be established.

Question

Quizplus · Accepted Answer

In an inflationary environment, LIFO results in higher cost of goods sold and lower taxable income, leading to lower income taxes compared to FIFO.

One of the Principal Reasons for Selecting the LIFO Cost