Question

Given equal circumstances and generally rising costs, which inventory method will increase the tax expense the most? LIFO Average cost method Income tax expense for the period will be the same under all assumptions FIFO

Answer 1

Answer:

FIFO.

Explanation:

In view of similar situations as well as usually increased prices, using inventory form of FIFO would raise taxation expenditure most because it means that perhaps the earliest items in such a corporation's inventory had first been selling and which the manufacturing prices goes accordingly.

• So, that's why the following answer is correct according to the given scenario.
• Other options are incorrect because they do not relate to the following scenario.