FIFO reports higher gross profit and net income than the LIFO method when (a)prices are increasing
Explanation:
FIFO (First in, First Out) reports higher gross profit and net income than the LIFO (Last In, First Out) method when prices are increasing.
The FIFO method refers to an inventory system wherein the first items purchased are thought to be sold first(i.e. First In First Out) while the most recent purchases make up the ending inventory.
On the other hand, the LIFO method is just the opposite. The recent purchase are sold first and the first item purchased makes up the ending inventory(last item that is in is sold first)
