Asked by Manuel Antonio on Jun 12, 2024
Verified
During periods of increasing costs, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.
FIFO
"First In, First Out," an inventory valuation method where goods first acquired are the first to be sold, used in accounting to calculate the cost of goods sold.
Net Income
The profit of a company after all expenses and taxes have been subtracted from total revenue.
- Master the dissimilarities and implementations of FIFO, LIFO, and average inventory valuation methodologies.
- Evaluate the influence of choosing particular inventory costing methods on financial statements.
Verified Answer
KM
Kidus MengesteabJun 15, 2024
Final Answer :
True
Explanation :
During periods of increasing costs, using the FIFO method results in higher costs of goods sold and lower ending inventory values compared to using the LIFO method. This leads to a higher net income for FIFO.
Learning Objectives
- Master the dissimilarities and implementations of FIFO, LIFO, and average inventory valuation methodologies.
- Evaluate the influence of choosing particular inventory costing methods on financial statements.
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