Concept:Under the LIFO (Last In, First Out) method, the most recently purchased items are charged to cost of sales first. These recent items are bought at higher prices during a period of rising prices.
Explanation:This is treated as an expense.
Therefore, the cost of goods sold directly reduces gross profit.
This leads to a lower reported gross profit and a lower net income.
The items remaining in closing stock are the older, cheaper inventory items.
So the closing stock value is lower than under FIFO.
Comparing all inventory methods during inflation, LIFO gives the highest cost of goods sold.
Hence, the tendency is for the company to show a higher cost of goods sold, rather than higher profit or higher closing stock.
Answer:A. have a higher cost of goods sold.