When costs are rising over time: LIFO results in higher profits that FIFO. Cost

Question

When costs are rising over time:

LIFO results in higher profits that FIFO.

Cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold.

ending inventory balances will be greater under LIFO.

FIFO results in higher profits than LIFO.

A.

LIFO results in higher profits that FIFO.

B.

Cost of goods sold using the weighted average method will be greater than LIFO cost of goods sold.

C.

ending inventory balances will be greater under LIFO.

D.

FIFO results in higher profits than LIFO.

Explanation / Answer

FIFO results in higher profits than LIFO.

This is because as per FIFO method costs would be less as compared to LIFO method since costs are rising.Lower costs under FIFO means higher profits.

D.

FIFO results in higher profits than LIFO.

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