If a Company Uses LIFO, a LIFO Liquidation Is Problematic

Multiple Choice

If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:

A) When inventory purchase costs are rising.
B) When inventory purchase costs are declining.
C) Whether inventory purchase costs are declining or rising.
D) LIFO liquidations are not problematic for a company's income taxes.When costs are rising, a liquidation causes pre-tax income and income taxes to rise.