Question

An inventory method that makes it possible to manipulate net income is the:

a. specific identification method.
b. FIFO method.
c. LIFO method.
d. average cost method.

Answer 1

The LIFO method allows for manipulation of net income by reporting lower COGS, resulting in higher net income.

Step-by-step explanation:

The inventory method that makes it possible to manipulate net income is the LIFO method (c). LIFO stands for Last-In, First-Out, and it assumes that the most recently acquired inventory items are sold first. By using the LIFO method, a company can report lower cost of goods sold (COGS), leading to higher net income. This can be advantageous for tax purposes or to portray a better financial position.