FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans,job security,and reputation.

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ANKUR KUMAR SRIVASTAVA · Accepted Answer

Final Answer : True, Explanation :  FIFO assumes that the first units purchased are the first ones to be sold, resulting in higher cost of goods sold and lower ending inventory values when purchase costs are rising. This increases reported income, which can benefit managers who have incentives tied to financial performance.

FIFO is preferred when purchase costs are rising and managers have incentives to report higher income for reasons such as bonus plans,job security,and reputation.

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