Companies A and B both use the LIFO cost flow assumption to value their inventory....
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Accounting
Companies A and B both use the LIFO cost flow assumption to value their inventory. The two companies have been in business for ten years and during that time each has experienced an increase in the number of units in its physical inventory. The two companies are identical except that, during the previous ten years, the unit cost of inventory sold by A has been rising whereas the unit cost of inventory sold by B has been falling. Suppose that at the end of year ten, each company sells all of its physical inventory. Which of the following is true?
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Companys As net income for year ten will equal Company Bs net income for year ten.
Company As net income for year ten will be lower than Company Bs net income for year ten.
Company As net income for year ten will be higher than Company Bs net income for year ten.
None of the above.
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