CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Compared with LIFO, FIFO results in a ______ when prices are rising.
A. lower inventory balance and lower net income
B. lower inventory balance and higher net income
C. higher inventory balance and higher net income

User Contributed Comments 2

User Comment
mickys how does it end up in higher NI?
najat because with FIFO, COGS is made of older prices (and inventory value made of the more current ones)
so COGS is smaller with FIFO than with LIFO, and NI therefore is higher.
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