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If the firm wants to report a low gross profit figure in hopes of reducing their income tax liability, the firm would use the LIFO inventory valuation method.
What is the LIFO inventory valuation method?
A period of rising prices is known as an inflationary period. Gross profit is total revenue less the cost of goods sold. The gross profit reported can be low if the cost of goods sold is high.
An inventory method that would allocate a high cost of goods sold is the LIFO inventory method. LIFO is a short form of last in, first out. It means that the inventory purchased the latest are the first to be sold.
An example: assume that beginning inventory is 200 units at a price of $2. During the month 100 units were bought $10. At the end of the month 100 units have been sold. If the LIFO method is used, the cost of goods sold would be $10.
To learn more about LIFO, please check: https://brainly.com/question/13779572
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