Cash flow impacts on FIFO vs LIFO

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I ran into a mock question that asked about if changing from FIFO to LIFO, how it impacts cash flow.
The answer said no impacts on cash flow. However, I though the tax expense would change which would impact cash flow?
 
Indirect method: It is because the impact is neutralized by the Lower Net income (decreases CFO) and the lower changes in inventory (increases CFO).
Best of luck tomorrow
 
No pre-tax change in cash flow; after-tax cash flow will likely change.
 
S2000magician wrote:
No pre-tax change in cash flow; after-tax cash flow will likely change.
Click to expand...
After tax cash flow is higher under LIFO (and hence the preponderance of LIFO in the US - where it is still allowed).
 
CMLSML wrote:
S2000magician wrote: No pre-tax change in cash flow; after-tax cash flow will likely change.
Click to expand...
After tax cash flow is higher under LIFO (and hence the preponderance of LIFO in the US - where it is still allowed).
Click to expand...
Only if costs are rising.
 
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