Comparing Inventory Methods Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each dropdown that follows, select the correct sign [less than ( ), or equal ()] for each comparison, assuming periods of rising prices. 1. FIFO inventory LIFO inventory 2. FIFO cost of goods sold LIFO cost of goods sold 3. FIFO net income LIFO net income 4. FIFO income taxes LIFO income taxes b. Why would management prefer to use LI FO over FIFO in periods of rising prices? 1. Income shown on the company's tax return would be lower if LIFO rather than FIFO is used. 2. Income shown on the company's tax return would be higher if LIFO rather than FIFO is used. 3. Cost of goods sold shown on the company's income statement would be lower if LIFO rather than FIFO is used. 4. Dividends shown on the company's financial statements would be higher if LIFO rather than FIFO is used. Feedhack than FIFO is u Feedback Check My Work Recall that FIFO reports higher gross profit, net income, and income taxes than the LIFO method when costs (prices) are increasing. Also, rising prices mean that items purchased later will cost more than items purchased earlier. Since FIFO ending inventory costs for the period are calculated based on the most recent prices, consider this cost flow in your answer regarding both inventory and cost of goods sold. 9 more Check My Work uses remaining