Results In The Highest Cost Of Goods Sold. A significant advantage of the LIFO method is its matching of current revenues with the most recent product costs. In a period of falling prices the use of which inventory cost flow method would typically result in the highest cost of goods sold.
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With the assumption of costs and prices generally rising which of the following is correct. The lower net income means lower taxes. You should record the cost of goods sold as a debit in your accounting journal.
A significant advantage of the LIFO method is its matching of current revenues with the most recent product costs.
But the cost of goods sold is an amalgam of the parts as well as your overhead and everything in between. This is multiplied by the actual number of goods sold to find the cost of goods sold. What amount would Madison report for cost of goods sold using LIFO under a periodic inventory system. Economists feel more comfortable with LIFO since the cost of goods sold is closer to the replacement costs of the goods.
