Does LIFO or FIFO give a higher net income when prices are rising?

In a rising price environment, FIFO (First-In, First-Out) typically results in a higher net income compared to LIFO (Last-In, First-Out). This is because FIFO assigns the older, lower-cost inventory to the cost of goods sold, leaving the higher-cost inventory on the balance sheet and resulting in a higher gross profit. Conversely, LIFO reflects the newer, higher-cost inventory in the cost of goods sold, which reduces net income. Thus, FIFO is generally more favorable for reported earnings during periods of inflation.