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the management of Otto Corp. is considering the effects of various inventory costing methods on its financial statements and its income tax expense. Assuming that

the management of Otto Corp. is considering the effects of various inventory costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing. 1. Which method will result in the lowest income tax expense?

select a method

FIFOAverage Cost MethodLIFO

method will result in the lowest income tax expense.

2. Which method will provide the highest net income?

select a method

LIFOFIFOAverage Cost Method

method will provide the highest net income.

3. Which method will provide the highest ending inventory?

select a method

LIFOFIFOAverage Cost Method

method will provide the highest ending inventory.

4. Which method will result in the most stable earnings over a number of years?

select a method

Average Cost MethodFIFOLIFO

will result in the most stable earnings over a number of years.

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