During periods when costs are rising and inventory quantities are stable, ending inventory will be:
A) Higher under LIFO than FIFO.
B) Lower under average cost than LIFO.
C) Higher under average cost than FIFO.
D) Higher under FIFO than LIFO.

Question

Quizplus · Accepted Answer

Under rising costs, ending inventory will be higher under FIFO than LIFO because FIFO assigns the oldest costs to remain in inventory, while LIFO matches the latest costs with sales. As the cost of goods increases, the older, lower costs that remain in FIFO inventory become more valuable, leading to a higher ending inventory valuation.

During Periods When Costs Are Rising and Inventory Quantities Are