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

Question

Quizplus · Accepted Answer

During a period of rising prices, the FIFO (First-In, First-Out) method will result in the highest net income. This is because the oldest, and typically lower cost inventory is used up first, leaving the newer, more expensive inventory on the balance sheet. This results in lower cost of goods sold (COGS) and, consequently, higher net income compared to other methods.

During a Period of Rising Prices, Which of the Following