The use of LIFO (Last-In, First-Out) in accounting for a firm's inventory:

• A. Means that the oldest inventory costs are expensed first.
• B. Always results in higher net income during periods of rising prices.
• C. Is required under International Financial Reporting Standards (IFRS).
• D. Results in the most recent inventory costs being expensed first.

Answer: (D)

Verified step by step guidance

1. Understand the LIFO (Last-In, First-Out) inventory valuation method: Under LIFO, the most recent inventory costs (the costs of the latest purchases) are expensed first when calculating the cost of goods sold (COGS). This means the oldest inventory costs remain in inventory on the balance sheet.
2. Analyze the statement 'Means that the oldest inventory costs are expensed first': This is incorrect because under LIFO, the most recent inventory costs are expensed first, not the oldest.
3. Evaluate the statement 'Always results in higher net income during periods of rising prices': This is incorrect because during periods of rising prices, LIFO typically results in higher COGS, which reduces net income compared to other methods like FIFO (First-In, First-Out).
4. Assess the statement 'Is required under International Financial Reporting Standards (IFRS)': This is incorrect because IFRS does not permit the use of LIFO. Companies using IFRS must use other inventory valuation methods like FIFO or weighted average cost.
5. Confirm the statement 'Results in the most recent inventory costs being expensed first': This is correct because it aligns with the definition of LIFO, where the latest inventory costs are used to calculate COGS.