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Exam IIA-CIA-Part3 topic 1 question 171 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 171
Topic #: 1
[All IIA-CIA-Part3 Questions]

All of the following are true with regard to the first-in, first-out inventory valuation method except:

  • A. It values inventory close to current replacement cost.
  • B. It generates the highest profit when prices are rising.
  • C. It approximates the physical flow of goods.
  • D. It minimizes current-period income taxes.
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Suggested Answer: D 🗳️
by Crazyhydra at Sept. 28, 2023, 8:30 a.m.

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Crazyhydra
5 months, 1 week ago
can someone explain why D?
upvoted 2 times
emtofid
1 month, 2 weeks ago
In a rising price environment, higher profits from FIFO result in higher taxable income, increasing current-period income taxes compared to methods like LIFO.
upvoted 1 times
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