In a period of steadily rising prices (meaning the cost to purchase inventory is increasing over time), what would be the implications of choosing FIFO vs. LIFO? Which method would show a higher net income, and which would show a lower net income? Which method does a better job of matching expenses and revenues? Which method reflects the most recent costs of inventory on the balance sheet? What implications might this have that would be relevant for users of the financial statements to know?
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In a period of steadily rising prices (meaning the cost to purchase in.docx
1. In a period of steadily rising prices (meaning the cost to purchase inventory is increasing over
time), what would be the implications of choosing FIFO vs. LIFO? Which method would show a
higher net income, and which would show a lower net income? Which method does a better job
of matching expenses and revenues? Which method reflects the most recent costs of inventory on
the balance sheet? What implications might this have that would be relevant for users of the
financial statements to know?
