Under the LIFO cost flow assumption during a period of rising costs, which of the following is false ? Solution Cost of goods sold will be lower under LIFO than under FIFO Cost of goods sold comes from the most recent inventory purchases. Since most recent costs are higher, the cost of goods sold under LIFO is higher than under FIFO .

1. Under the LIFO cost flow assumption during a period of rising costs, which of the following is
false ?
a) Cost of goods sold will be lower under LIFO than under FIFO.
b) Net income will be lower under LIFO than under FIFO.
c) Income tax expense will be lower under LIFO than under FIFO.
d) Ending inventory will be lower under LIFO than under FIFO.
Solution
Cost of goods sold will be lower under LIFO than under FIFO
Cost of goods sold comes from the most recent inventory purchases. Since most recent costs are
higher, the cost of goods sold under LIFO is higher than under FIFO