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A company is experiencing continuously lower costs. Which cost flow assumption will result in less income tax expense for this company?

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Question added by Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed
Date Posted: 2014/05/26
Akram Massoud
by Akram Massoud , FINANCE MANAGER , Autoexcellence LTD

First In, First Out - FIFO

Muhammad Usman Ashraf
by Muhammad Usman Ashraf , VAT Accountant , Jumeirah Golf Estates

a.FIFO

Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

Answer A FIFO

Wael Mahmoud Afifi
by Wael Mahmoud Afifi , AFC Manager , confidential

FIFO

Mubashir Shahzad
by Mubashir Shahzad , Oracle Functional Consultant/ERP Business Analyst , Jaffer Business System

low income tax figure can be achieved if groos profit/profit is lower.

if company uses lifo costing method and prices of that material are increasing, then cost of goods sold will be higher resulting in lower groos profit and ending inventory figure.viceversa for FIFO.

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