In a context of rising costs,income reported under FIFO is:
A) Higher than under LIFO or WAC.
B) Lower than under LIFO or WAC.
C) The same as under LIFO or WAC.
D) Sometimes higher,sometimes lower than under LIFO or WAC.

Question

Quizplus · Accepted Answer

In a rising cost environment, FIFO (first-in, first-out) assumes that earlier inventory items are sold first and newer, more expensive items remain in inventory. As a result, higher-cost inventory items are expensed first, leading to a higher reported income compared to LIFO (last-in, first-out) or WAC (weighted average cost) methods.

In a Context of Rising Costs,income Reported Under FIFO Is