An Analyst Is Comparing Two Companies; One Uses the LIFO

question 38

Multiple Choice

An analyst is comparing two companies; one uses the LIFO inventory cost flow assumption, and the other uses the FIFO inventory cost flow assumption.If prices are rising, how will the FIFO using company's gross margin and current ratio compared to the LIFO using company's, if all other factors are equal? $$\begin{array} { l l l } & \text { FIFO } &{ \text { FIFO } } \\& \text { Gross Margin } & \text { Current ratio } \\\hline\text { A. } & \text { Higher } & \text { Higher } \\\text { B. } & \text { Higher } & \text { Lower } \\\text { C. } & \text { Lower } & \text { Higher } \\\text { D. } & \text { Lower } & \text { Lower }\end{array}$$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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