Jefferson Corp. decided to change its inventory valuation method from FIFO to LIFO in a period of rising prices. What was the result of the change for the ending inventory and net income?
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A) |
Decreases ending inventory; decreases net income. |
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B) |
Increases ending inventory; increases net income. |
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C) |
Increases ending inventory; decreases net income. |
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D) |
Decreases ending inventory; increases net income. |
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The correct answer was A.
LIFO provides the lowest inventory values and the lowest net income under rising prices because the least expensive purchases are left in inventory and the more expensive purchases flow to COGS which lowers NI. | 
发表于 2006-4-27 16:38
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