Asked by
Naser AlRoumi
on Dec 05, 2024Verified
Which of the following statements is correct?
A) FIFO reports lower net income amounts than LIFO when unit costs are increasing.
B) LIFO reports a higher net income amount than FIFO when unit costs are increasing.
C) LIFO reports a higher net income amount than FIFO when unit costs are decreasing.
D) LIFO reports the same amount of net income as FIFO when unit costs are increasing.
Net Income
A company's remaining earnings once total revenue has been reduced by all expenses, taxes, and costs.
LIFO
An inventory valuation method that assumes the last items placed in inventory are the first sold, standing for Last-In, First-Out.
FIFO
FIFO, an acronym for "First In, First Out," is an inventory valuation method where goods purchased first are the ones sold first, affecting cost of goods sold and inventory on the balance sheet.
- Examine how different inventory costing models (LIFO, FIFO, Average) affect financial performance.
Verified Answer
ME
Learning Objectives
- Examine how different inventory costing models (LIFO, FIFO, Average) affect financial performance.