Choice "B" is correct. Under the LIFO method, the inventory on hand at the end of the year is treated as being composed of the earliest acquired goods.Choice "d" is incorrect. In periods of rising prices, the LIFO method results in a higher cost of sales and lower taxable income when compared to the FIFO method.Choice "c" is incorrect. The taxpayer is not required to receive permission each year from the Internal Revenue Service to continue the use of the LIFO method.Choice "a" is incorrect. The LIFO method can be used for tax purposes only if the LIFO method is used for financial statement purposes.
