Question

For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume that prices are rising. (a) select a method results in a higher quality of earnings ratio. (b) select a method results in higher phantom profits. (c) select a method results in higher net income. (d) select a method results in lower taxes. (e) select a method results in lower net cash provided by operating activities.

Answer 1

Answer:  D. select a method results in lower taxes. (e) select a method results in lower net cash provided by operating activities

Explanation: Statement for LIFO and FIFO are rising definitely the organisation would want to reduce its taxes to significant amount and its operating activities would be checked during this period because it boils down to the price at which the product is being manufactured and sold out  to the different customers that buys the company good. Last in first out and first in First out.  This rule is used in  warehousing and  inventory management.