In a period of falling prices the LIFO method results in a lower cost of goods sold than the FIFO method.

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LIFO (last-in, first-out) assumes that the last items purchased are the first items sold, so when prices are falling, the lower-priced items sold under LIFO will result in a lower cost of goods sold compared to FIFO (first-in, first-out), which assumes that the first items purchased are the first items sold.

In a Period of Falling Prices the LIFO Method Results