A firm is assumed to use perpetual system which separately determined inventory under FIFO and LIFO...

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Accounting

A firm is assumed to use perpetual system which separatelydetermined inventory under FIFO and LIFO and then compare theresults.
i) In each space below, place thecorrect sign (< / > / =) for each comparison by assumingperiods of rising prices.
a. FIFO supplies                     LIFO supplies
b. FIFO cost of sales             LIFO cost of sales
c. FIFO net profit                   LIFO net profit
d. FIFO taxableincome        LIFOtaxable income
ii) Why the use of LIFO is morepreferable by a management compared to FIFO in period of risingprices?
(5)
(Total: 15 marks)

Answer & Explanation Solved by verified expert

3.6 Ratings (294 Votes)

i In a situation of rising prices the cost of inventory latest purchased would be higher as compared to the cost of inventory purchased earlier As a result the cost supplies under FIFO See Answer

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