Question $1$

$7$ pts

Signify TRUE or FALSE as applicable for each of the following items as they pertain to assigning costs to merchandise inventory units.

FIFO generates a higher net income than

LIFO when costs are rising.

LIFO generates a higher net income than FIFO when costs are falling.

LIFO always generates the lowest net income of all possible costing alternatives.

FIFO better reflects current replacement costs on the balance sheet as compared to LIFO.

LIFO better reflects current replacement costs on the income statement as compared to FIFO.

A business MUST choose the method that most closely reflects its physical flow of inventory.

If costs do not change over time, all methods will yield the same results.