For a company to increase its assets during a deflationary period, it needs to follow the:

A. FIFO method.
B. LIFO method.
C. Average cost of inventory method.

Correct Answer: B

Using LIFO during a deflationary period would make a company add the most recently purchased inventory (the least expensive), which would leave the oldest inventory (the most expensive) to be added to the ending inventory. Hence, the increased value of inventory would lead to increased assets.