FINANCIAL STATEMENT EFFECTS OF FIFO AND LIFO. The chart below identifies which costs (older or newer) are in ending inventory and cost of goods sold for FIFO and LIFO:

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Ending inventory Cost of goods sold FINANCIAL STATEMENT ITEM FIFO LIFO Newer Older Older Newer When prices are rising, older costs will be lower and newer costs will be higher. REQUIRED: Beginning with the relationships identified in the chart above, complete the table below by indicating whether the specified financial statement item is higher or lower under FIFO and LIFO. The ending inventory and cost of goods sold rows have been completed for you. FINANCIAL STATEMENT ITEM Ending inventory Cost of goods sold Gross margin Income before taxes Payments for income taxes. Net income FIFO LIFO Higher Lower Lower Higher