Financial Reporting and Analysis Q221
- Option : C
- Explanation : If prices are rising and a company uses the LIFO method then cost of sales will be high and inventory value will be low. If prices are rising and a company uses the FIFO method then cost of sales will be low and inventory value will be high. Hence the change in prices and the inventory valuation method impact the amount assigned to cost of sales versus inventory. The type of good does not impact the amount assigned to cost of sales versus inventory.
