- 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)
