Financial Reporting and Analysis Q248

248Amerco Inc. uses the LIFO method and Britco Ltd. uses the FIFO method. During periods of falling prices, compared to the cost of replacing of the inventory, the cost of goods sold reported by:

Option : A
Explanation : Britco uses FIFO which means that cost of goods sold reflects old prices. Given that prices are falling, old prices are higher than the current cost of replacing inventory.

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