During a period of rising prices, which of the following cost flow assumptions will result in the highest ending inventory?
A)FIFO
B)Net realizable value
C)Average cost
D)Specific identification

Question

Quizplus · Accepted Answer

During rising prices, FIFO (first-in, first-out) will result in the highest ending inventory because it assumes that the first goods purchased are the first goods sold, leaving the most recently purchased goods in inventory at the higher prices. This results in a higher ending inventory value compared to other methods such as LIFO (last-in, first-out) or average cost.

During a Period of Rising Prices, Which of the Following