FIFO reports higher gross profit and net income than the LIFO method when a. prices are increasing b. prices remain stable c. prices are reduced by 50% d. prices are decreasing

Question

Krista Fox

Business

28 November, 14:15

FIFO reports higher gross profit and net income than the LIFO method when a. prices are increasing b. prices remain stable c. prices are reduced by 50% d. prices are decreasing

+3

Answers (1)

Know the Answer?

Shannon Henry · Answer 1

FIFO reports higher gross profit and net income than the LIFO method when (a) prices are increasing

Explanation:

FIFO (First in, First Out) reports higher gross profit and net income than the LIFO (Last In, First Out) method when prices are increasing.

The FIFO method refers to an inventory system wherein the first items purchased are thought to be sold first (i. e. First In First Out) while the most recent purchases make up the ending inventory.

On the other hand, the LIFO method is just the opposite. The recent purchase are sold first and the first item purchased makes up the ending inventory (last item that is in is sold first)