[add1972]

If the cost of a retailer's merchandise are rising, which of the following statements is true?

2 of the possible answers are about either FIFO or LIFO will attract investors.

1 answer is FIFO will lower taxes

1 answer is LIFO will increase taxes.

I'm guessing that using FIFO will lower taxes, because if the merchandise cost is rising then profit will be reduced

[Vertje]

For inventory with increasing cost, LIFO is used on tax return beacause it normally restults in lower income taxes.

And

For inventory with decreasing cost, FIFO is moest often used for both the tax return and financial statements.