All of the following are true with regard to the first-in, first-out inventory valuation method except:
All of the following are true with regard to the first-in, first-out inventory valuation method except:
The first-in, first-out (FIFO) inventory valuation method does not minimize current-period income taxes. Under FIFO, the oldest costs are assigned to the cost of goods sold, which in a period of rising prices, means the lowest costs are matched against current revenues, resulting in higher profits and, therefore, higher income taxes. FIFO values inventory closer to current replacement cost, generates the highest profits when prices are rising, and approximates the physical flow of goods.
can someone explain why D?