EX 7-10 Comparing inventory methods
Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results.
a. In each space below, place the correct sign [less than (<), greater than (>), or equal
(=)] for each comparison, assuming periods of rising prices.
|
1. |
FIFO inventory |
LIFO inventory |
|
|
2. |
FIFO cost of goods sold |
LIFO cost of goods sold |
|
|
3. |
FIFO net income |
LIFO net income |
|
|
4. |
FIFO income tax |
LIFO income tax |
b. Why would management prefer to use LIFO over FIFO in periods of rising prices?