Whether purchase costs are rising or falling, FIFO always will yield the highest gross profit and net income.

Name: Whether purchase costs are rising or falling, FIFO always will yield the highest gross profit and net income.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) yields the highest gross profit and net income when purchase costs are rising, but not when they are falling. In a falling cost environment, LIFO (Last-In, First-Out) would result in higher gross profit and net income.

Whether Purchase Costs Are Rising or Falling, FIFO Always Will