CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

When price levels have been increasing throughout a period, a company using the LIFO inventory valuation method instead of the FIFO inventory valuation method would have ______.

A. higher equities
B. lower net income
C. higher net income
Correct Answer: B

In a period of rising prices, LIFO will yield a lower income because its cost of goods sold is higher (since it uses newer, and higher, costs).

User Contributed Comments 1

User Comment
teddajr LIFO -> Low NI -> Low tax -> High CF
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