Which of the following inventory method will give the highest net earnings in a period of rising prices?
A)FIFO
B)LIFO
C)Specific Identification Method
D)Weighted Average Cost

Question

Quizplus · Accepted Answer

The FIFO method assumes that the first items purchased are the first items sold, so the cost of goods sold is based on the lower cost items from earlier purchases. As prices are rising, the cost of goods sold will be lower with the FIFO method, resulting in higher net earnings.

Which of the Following Inventory Method Will Give the Highest