In periods of falling prices
A)FIFO will result in a higher ending inventory valuation than the average cost formula.
B)FIFO will result in a higher cost of goods sold than the average cost formula.
C)the average cost formula will result in a higher cost of goods sold than the FIFO cost formula.
D)the average cost formula will result in a lower ending inventory valuation than the FIFO cost formula.

Question

Quizplus · Accepted Answer

In periods of falling prices, FIFO results in a higher cost of goods sold because older, higher-cost inventory is sold first, while the average cost formula spreads the cost evenly, resulting in a lower cost of goods sold.

In Periods of Falling Prices