Haltata Turf& Sod currently uses the first in, first out (FIFO) method to account for inventory. Due to significant tax-loss carryforwards, the company has a tax rate of zero. Currently prices are rising and inventory is stable or increasing. If the company were to use last in, first out (LIFO) instead of FIFO : （）
A. net income would be lower, and cash flows would be higher.
B. cash flow would remain the same, and working capital would decrease.
C. gross margin would increase, and average stockholder’ s equity would decrease.
参考答案：B
解析：
In the absence of taxes, there is no difference in cash flow between LIFO and FIFO. In addition, using LIFO would result in lower working capital ( inventory is lower). The other statements are false. Using LIFO would result in lower net income because of a lower gross margin (cost of goods sold is higher). Average stockholder’ s equity would decrease because of reduced income.