Back then. A dollar was worth WAYYYYY more than it is now. back then you could buy a lollipop for a like a penny. However as time went on we went through deflation and prices went down
LIFO : results in a higher quality of earnings ratio.
FIFO : in higher phantom profits.
FIFO : results in higher net income.
LIFO : results in lower taxes.
FIFO : results in lower net cash provided by operating activities.
Explanation:
FIFO states that first goods brought are the first to be sold and the inventory consists of the most recent purchases and LIFO assumes that the last goods are purchased and first sold.
Thus LIFO results in a higher earning ratio and in a lowering of the taxes and FIFO at higher net incomes and lowers the net cash provided for the operating activities.
