Reflection: Rising Prices

The following Reflection, like others you will encounter in the course, requires you to use your judgement and draw upon personal experience and the knowledge you have acquired so far in the course. Do not turn to outside resources to find one single correct answer or definition. Upon submission, you can read and comment on your peers responses to see how others thought about the question. If you would like to discuss further, feel free to start a thread on peer help. In a period of steadily rising prices (meaning the cost to purchase inventory is increasing over time), what would be the implications of choosing FIFO vs. LIFO? Which method would show a higher net income, and which would show a lower net income? Which method does a better job of matching expenses and revenues? Which method reflects the most recent costs of inventory on the balance sheet? What implications might this have that would be relevant for users of the financial statements to know?