Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results.
1. In each space below, place the correct sign [less than (<), greater than (>), or equal (=)] for each comparison, assuming periods of rising prices.
|
a. FIFO inventory |
__________ |
LIFO inventory |
|
b. FIFO cost of goods sold |
__________ |
LIFO cost of goods sold |
|
c. FIFO net income |
__________ |
LIFO net income |
|
d. FIFO income tax |
__________ |
LIFO income tax |
2. Why would management prefer to use LIFO over FIFO in periods of rising prices?