Question

Multiple Choice During periods of inflation, LIFO makes the balance sheet less representative of the actual inventory values than if FIFO were used During periods of inflation, FIFO makes the balance sheet less representative of actual inventory values than if LIFO were used After inflation ends, distortion due to LIFO will disappear as inventory is sold During periods of inflation, LIFO overstates earnings relative to FIFO

Answer 1

The answer is "Option A".

Step-by-step explanation:

The numbering of the choice is missing, which can be defined in the attached file please find it.

In the given question the first choice is correct because LIFO was introduced, its balance sheet throughout the LIFO reserve is unique and balance change in the current year reflects the on the cost of goods sold for the current year.

In this, the LIFO allows the financial sheet less representative of current stock values throughout periods of inflation then FIFO Utilized, that's why it is correct.