Which of the following inventory costing methods yields the highest Gross profit when costs are rising during the accounting period?

Question

Quizplus · Accepted Answer

First-in, first-out (FIFO) assumes that the first units purchased are the first ones sold. When costs are rising, older, cheaper inventory is used for COGS, leaving newer, more expensive inventory for the ending inventory valuation. This results in a higher COGS and a lower ending inventory value, which yields a higher Gross Profit.

Which of the Following Inventory Costing Methods Yields the Highest