Sunday, August 10, 2008

FIFO LIFO Inventory Problem

1. The main advantage to the last-in, first-out method LIFO method of inventory compared to first-in, first-out FIFO method of inventory costing include:

A. a closer relationship between ending inventory and current cost
B. higher net income with inflation.
C. Lower income tax with inflation.
D. Easier record keeping


Answer:

B

Additional Inventory Accounting Practice Problems:
FIFO Inventory and Increasing Taxes
Inventory Cost Flow Assumptions

1 comment:

Anonymous said...

B(why)
In my opinion C is the corrct answer.
becouse using Lifo Method with inflation(prices Increases)>>>>Higher COGS>>>>> Thus Lower NI

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