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Some companies use the First-In, First-Out (FIFO) Inventory valuation method while others use the Last-In, First-Out (LIFO) Inventory valuation method.

When a company uses the First-In, First-Out (FIFO) Inventory valuation method during times of price inflation, the amount of the Cost of Goods Sold is
Select Option lowerhigher
while net income is
Select Option lowerhigher
than when the Last-In, First-Out (LIFO) Inventory valuation method is used . In addition, the balance of the Inventory account reported on the year-end Balance sheet includes the
Select Option oldestnewest
costs of items purchased by the company resulting in a
Select Option lowerhigher
balance in that account than if the LIFO Inventory valuation method is used.
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