If merchandise inventory is being valued at cost and the purchase price is steadily falling,which method of costing will yield the largest gross profit?
A)Average cost
B)LIFO
C)FIFO
D)All methods will generate the same gross profit.

Question

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) will yield the largest gross profit because it assumes that the most recently purchased inventory is sold first. As the purchase price is steadily falling, the cost of goods sold will be lower under LIFO, resulting in a higher gross profit.

If Merchandise Inventory Is Being Valued at Cost and the Purchase