LIFO inventory method during rising prices results in:

A Higher net income

B Lower net income and lower ending inventory compared to FIFO

C No impact on financials

D Higher ending inventory

✓ Correct Answer: Option B

LIFO in inflationary periods: most recent (higher cost) inventory sold first → higher COGS → lower net income → lower ending inventory. Tax benefit but lower reported earnings.

💡 Why is B) the correct answer?

The correct answer to the question "LIFO inventory method during rising prices results in:" is Option B: Lower net income and lower ending inventory compared to FIFO.

The other options — A) Higher net income, C) No impact on financials, D) Higher ending inventory — are incorrect for this Pre-MBA Exam Prep question. As explained above: LIFO in inflationary periods: most recent (higher cost) inventory sold first → higher COGS → lower net income → lower ending inventory. Tax benefit but lower reported earnings.

📚 About This Pre-MBA Exam Prep Practice Question

This 3-level Pre-MBA Exam Prep question from the Accounting topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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LIFO inventory method during rising prices results in:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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