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During a period of inflation, firms using LIFO will have the: A. lowest cost of goods sold, the highest net income, and the lowest inventory value. B. highest cost of goods sold, the lowest net income, and the highest inventory value. C. lowest cost of goods sold, the highest net income, and the highest inventory value. D. highest cost of goods sold, the lowest net income, and the lowest inventory value.

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Answer:

The answer is D.

Explanation:

For LIFO(Last in First out), its inventory value(that is, ending inventory) has lowest value because the ending value reflects the cost of earlier purchased inventory.

The cost of sales has the highest value because of the lowest value of the ending inventory.

And lastly, its net income will be at his lowest because of the highest cost of sales.

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