Assume that a firm separately determine inventory under FIFO and LIFO and then compared the results.

a. In each space below, place the correct sign [less than (<), greater than (>), or equal (=)] for each comparison, assuming periods of rising prices.

1. FIFO Inventory _______________LIFO inventory

2. FIFO_______________LIFO cost of goods sold

3. FIFO_______________LIFO net income

4. FIFO_______________LIFO income tax

b. Why would management prefer to use LIFO over FIFO in period of rising prices?