Question

Which of the following is true concerning inventory cost flow assumptions? LIFO produces higher net income...

Which of the following is true concerning inventory cost flow assumptions?

LIFO produces higher net income than FIFO in a period of rising costs.

None of the other answers are true.

FIFO is an income statement focus.

LIFO is a balance sheet focus.

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Answer #1

None of these is the answer.

FIFO and LIFO methods are the two methods to value the inventory on the Balance sheet.

LIFO - LIFO methods means the last purchased inventory is sold and it it is expended to income statement and the remaining is listed in Balance sheet. The inventory sold is priced higher at its actual price.

FIFO - FIFO method means the inventory first purchased is sold and Inventory sold at price lower than which is listed actually in the Balance sheet.

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