E6-16 Comparing inventory methods

Assume that a firm separately determined inventory nder FIFO and LFO and then compare the results.

1. in each space below, place tge corect sign (less than, or greater than, or equal for each comparison, assuming periods of rising prices.

a. FIFO inventory_____________ LIFO inventory.

b. FIFO cost of goods sold _________ LIFO cost of goods sold.

c. FIFO net income _____________ LIFO net income.

d. FIFO income tax __________ LIFO income tax.

2. Why would management prefer to use the LIFO over FIFO i periods of rising prices?