Under LIFO, net income exists if revenues are sufficient to cover the __________ cost of the units of inventory sold, provided new units are acquired before the end of the accounting period.

Remember, a LIFO method of accounting for inventory differs in that it records the most recently produced items as sold first; meaning Last in, First Out. Thus leading to recording the lowest cost of older products in the inventory.

A case of lower Net income (income after deductions of cost) thus exists if revenues are sufficient to cover the total cost of the units of inventory sold which reduces taxes.

Tundexi Tundexi · Answer 2 · 2022-01-04T12:59:45+01:00

The net income exists if revenues are sufficient to cover the total cost of the units of inventory sold if the provided new units are acquired before the end of the accounting period under LIFO method

Let understand that the LIFO method for inventory differs from FIFO methods because its records the most recently produced items as sold first as against the first produced items.

The LIFO method for inventory leads to record of lowest cost of older products in the inventory.

So, a case of lower Net income exists if the revenues are sufficient to cover the total cost of the units of inventory sold which reduces taxes.

Hence, the net income will exists if revenues are sufficient to cover the total cost of the units of inventory sold if the provided new units are acquired before the end of the accounting period under LIFO method