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Safari File Edit View History Bookmarks Window Help ezto.mheducation.com MS Access Lab 4-Queries and Reports Chapter 5 & 7 Quiz connect. Financial Accounting: Spring 20 ACCOUNTING Chapter 5& 7 Quiaz Question 2 (of 10) ? 2. Which of the following statements is correct when inventory unit costs are increasing? O LIFO will result in lower net income and a higher inventory valuation than will FIFO. O FIFO will result in lower net income and a lower inventory valuation than will LIFo O LIFO will result in higher net income and lower inventory valuation than will FIFO. O FIFO will result in higher net income and a higher inventory valuation than will LIFO 12.667 26

Explanation / Answer

If inventory unit cost is increasing then it means under LIFO Cost of goods sold is higher cost of goods sold is higher it means net income will be lower and ending inventory is lower.

If inventory unit cost is increasing then it means under FIFO cost of goods sold is lower cost of goods sold is lower it means net income will be higher and ending inventory is higher.

so answer is d) FIFO will result higher net income and a higher inventory valuation than will LIFO

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