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Basic Question 13 of 16
During a time of increasing inventory and rising prices, FIFO will result in ______ than LIFO.
B. higher taxes
C. lower net income
D. lower working capital
A. higher COGS
B. higher taxes
C. lower net income
D. lower working capital
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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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® 2024 Level I Curriculum, Volume 2, Module 6.