In an inflationary environment, which inventory cost flow method, FIFO or LIFO, reports the lowest amount of net income?
What will be an ideal response?
LIFO
The first-in, first-out (FIFO) cost flow method requires that the cost of the items purchased first be assigned to cost of goods sold. The last-in, first-out (LIFO) cost flow method requires that the cost of the items purchased last be charged to cost of goods sold. In an inflationary environment, LIFO will produce a higher cost of goods sold, so it will result in the lowest net income and the smallest balance in ending inventory.
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a. prima facie case. b. mixed-motive case. c. bona fide occupational qualification. d. suo moto case.
A risk manager was asked to review all the loss exposures his company faces. The risk manager noted that the company obtained over 90 percent of its raw materials from one supplier
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