Accounting for IGCSE & O level - Final Statements (Section 8 - No. 22)
In times of rising prices, what impact does LIFO typically have on profits?
Higher profits
Lower profits
No impact
Fluctuating profits
Forklaring
In rising prices, LIFO leads to lower profits because it uses the older, cheaper costs for inventory sold and the higher more recent costs for inventory on hand, increasing COGS and decreasing profits.