Question

When costs to purchase inventory are rising, using LIFO leads to reporting ______ cost of goods sold and ______ net income than FIFO.

Answer 1

When costs to purchase inventory are rising, using LIFO leads to reporting lower cost of goods sold and higher net income than FIFO.

LIFO and FIFO

LIFO means last in last out  while FIFO represent first in first out. In a situation were price of goods and service are falling using LIFO tend to assume that the newer and less expensive inventory is sold out first.

This tend to lead to lower cost of goods sold and higher net income.

Inconclusion when costs to purchase inventory are rising, using LIFO leads to reporting lower cost of goods sold and higher net income than FIFO.

Learn more about LIFO and FIFO here:brainly.com/question/24938626