EX 7-10 Comparing inventory methods
Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results.
a. In each space below, place the correct sign [less than (<), greater than (>), or equal
(=)] for each comparison, assuming periods of rising prices.
FIFO cost of goods sold
LIFO cost of goods sold
FIFO net income
LIFO net income
FIFO income tax
LIFO income tax
b. Why would management prefer to use LIFO over FIFO in periods of rising prices?