If one were applying the FIFO retail method in a period of rising prices to estimate the ending inventory the dollar amount would be:
A) the same as the average cost method.
B) lower than the average cost method.
C) higher than the average cost method.
D) the same cost ratio as was used for the opening inventory.

Question

Quizplus · Accepted Answer

In a period of rising prices, the FIFO (First-In, First-Out) method would result in a higher ending inventory value compared to the average cost method. This is because FIFO assumes that the oldest, and typically cheaper, inventory is sold first, leaving the more expensive, recently purchased items in inventory.

If One Were Applying the FIFO Retail Method in a Period