Assume that a firm separately determined inventory under FIFO and LILO and then

Question

Assume that a firm separately determined inventory under FIFO and LILO and then compared the results. 1. In each space below,place the corrrect sign [less than (<),greater than(>), or equal (=)] for each comparison, assume in periods of rising prices. a. FIFO inventory____LILO inventory. b. FIFO cost of goods sold___LILO cost of goods sold. c. FIFO net income___LIFO net income. d. FIFO income tax___LIFOincome tax. 2. Why would management prefer to use LIFO over FIFO in periods of rising prices?

Explanation / Answer

In the periods of rising prices a. FIFO Inventory GREATER THAN LIFO Inventory b FIFO Cost of Goods sold LESS THAN LIFO Cost of Goods sold c FIFO Net Income GREATER THAN LIFO Net Income d FIFO Income Tax GREATER THAN LIFO Income Tax

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