Question

In time of rising prices, ending inventory determined using the LIFO inventory assumption will be ________ than ending inventory determined using the FIFO inventory assumption.

Answer 1

Answer:

LOWER

Explanation:

In time of rising prices, the inventory valuation made according to LIFO ( LAST IN FIRST OUT )  will be LOWER than the one valued according to FIFO ( FIRST IN FIRST OUT ) method.

The reason is that in LIFO, the newer stock is sold first, therefore, the remaining inventory is valued according to older purchases, that in inflationary context have lower prices.