Multiple Choice Question

How does the inventory costing methods affect the income statement when costs tend to rise over time?

The methods do not have an effect on the income statement.

Inventory on the income statement differs between the methods causing income tax expense to differ.

Sales and cost of goods sold on the income statement differ between the methods causing income tax expense to differ.

Cost of goods sold on the income statement differs between the methods causing income tax expense to differ.

Inventory on the income statement differs between the methods causing sales to differ.