If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?
A) average cost
B) LIFO
C) FIFO
D) weighted average

Question

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) will yield the largest net income 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 net income.

If Merchandise Inventory Is Being Valued at Cost and the Purchase