FINANCIAL STATEMENT EFFECTS OF FIFO AND LIFO The chart below lists financial statement items that may be affected by the use of either the FIFO or LIFO inventory costing methods:

FIFO LIFO Ending inventory Cost of goods sold Gross margin Income before taxes Payments for income taxes Net income Required:

Assuming that prices are rising, complete the chart by indicating whether the specified item is

(a) higher or

(b) lower under FIFO and LIFO.

Exercise