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Basic Question 13 of 16

During a time of increasing inventory and rising prices, FIFO will result in ______ than LIFO.

A. higher COGS
B. higher taxes
C. lower net income
D. lower working capital
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User Contributed Comments 2

User Comment
guna In FIFO, original prices < latest rising prices, so lower costs results in higher taxes
teddajr Lower COGS -> Higher EB(I)T -> Higher taxes
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I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

calculate and explain how inflation and deflation of inventory costs affect the financial statements and ratios of companies that use different inventory valuation methods

CFA® 2025 Level I Curriculum, Volume 2, Module 6.