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In periods of rising prices and stable or increasing inventory quantities, a company using LIFO rather than FIFO will report COGS and cash flows which are, respectively:
Answer Both are higher.
The reason given is: LIFO results in higher cash flow because with lower reported income, income tax will be lower.
Problem is I know the answer instinctively unfortunately I still don't understand why the cash flow will be higher, I just can't visual it in my head.