CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

In periods of rising prices and stable or increasing inventory quantities, the impact of LIFO and FIFO on income before taxes is that ______
A. LIFO results in lower income.
B. FIFO results in lower income.
C. The choice of LIFO vs. FIFO does not affect income.
Explanation: LIFO retains (earlier) lower cost inventory, thereby increasing COGS and thereby decreasing income. FIFO results in the opposite situation.

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