Based on Your Answers to Questions 6 and 7, Which

Multiple Choice

Based on your answers to Questions 6 and 7, which of the following is a disadvantage of using the IFRS FIFO method, as compared to Average-cost under U.S. GAAP?

A) Under FIFO, during periods of inflation, inventory costs matched against sales are lower than the inventory replacement cost.
B) When price levels increase and inventory quantities do not decrease, taxes are greater under FIFO
C) FIFO may cause poorer buying habits as management attempts to manipulate net income.
D) FIFO typically causes lower reported earnings.