The peaks and valleys of the business cycle tend to be smoothed out using which inventory method?
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A. B. C. D.Explanation
When prices are moving either upward or downward, the cost of goods sold (under LIFO) will show costs closer to the price level at the time the goods were sold.
Therefore the LIFO method tends to show a smaller net income during inflationary times and a larger net income during deflationary times than other methods of inventory valuation.