During a period of consistently rising prices, the method of inventory costing that will result in reporting the greatest cost of merchandise sold is:
A) FIFO.
B) average cost.
C) LIFO.
D) All methods will generate the same cost of merchandise sold.

Question

Quizplus · Accepted Answer

LIFO (Last-In-First-Out) method assumes that the last items purchased are the first to be sold. During rising prices, the most recent purchases will have the highest prices and will be sold first. Therefore, LIFO will result in reporting the highest cost of merchandise sold, as compared to FIFO or average cost methods.

During a Period of Consistently Rising Prices, the Method of Inventory