Which of the Following Is a Disadvantage to Business of the LIFO

question 40

Multiple Choice

Which of the following is a disadvantage to business of the LIFO method of applying costs to inventory?

• A) It is difficult for a computer program to apply the method.
• B) It understates the balance sheet value for inventory.
• C) Current income is matched with the most recent costs of acquiring goods.
• D) If it is allowed for tax purposes, in times of rising prices it results in less tax being paid in the current period.

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