If a company uses LIFO inventory method in falling price

Under LIFO when prices fall, last in are cheaper COGS lower higher profits ending inventory higher older higher cost. Note C is wrong here.

environment (prices decreasing), then:

A Cost of goods sold will be low, profits high Correct Answer Incorrect Answer

B COGS will be high, profits low Correct Answer Incorrect Answer

C Ending inventory will reflect newer lower prices Correct Answer Incorrect Answer

D Both A and C Correct Answer Incorrect Answer

E Both B and C Correct Answer Incorrect Answer

Solution

Under LIFO when prices fall, last in are cheaper → COGS lower → higher profits; ending inventory higher (older higher cost). Note C is wrong here.

Practice Next

More Accounts Questions

Thank You for posting your query. Please check your email for further guidance

Please Register/Login to Download Question