Final answer:
The incorrect statement about the FIFO method is that it is preferable if revenues have been increasing slower than costs. FIFO is typically not preferred in this scenario as it might inflate profits and result in higher taxes during periods of rising costs.
Step-by-step explanation:
The incorrect statement related to the FIFO method among the options given is: b. FIFO is preferable if revenues have been increasing slower than costs. This statement is incorrect because FIFO, which stands for First-In, First-Out, assumes that the earliest goods purchased are the first to be sold. Therefore, in a period of rising costs, this will result in the oldest, less expensive inventory being used to calculate cost of goods sold, potentially resulting in a higher profit margin, contrary to the scenario described in the statement. FIFO is not traditionally preferred if revenues increase at a slower pace than costs since it would lead to higher reported profits and thus, higher taxes.
On the other hand, FIFO is considered appropriate in scenarios where specific identification is not traditional (a), where traditional accounting practices do not prefer FIFO (c), and where prices tend to lead costs (d), as it matches the actual movement of inventory for many businesses and may lead to financial statements that reflect the current market value of inventory.