Which one of the following cost-flow assumptions provides the lowest inventory value in periods of rising prices?
A)FIFO periodic
B)LIFO periodic
C)FIFO perpetual
D)moving average

Question

Quizplus · Accepted Answer

LIFO (last in, first out) assumes that the most recently purchased inventory items are sold first. In a period of rising prices, this means that the remaining inventory consists of older, lower-cost items, resulting in a lower inventory value compared to FIFO (first in, first out), which assumes that the oldest inventory items are sold first. FIFO results in a higher inventory value in a period of rising prices. Perpetual and periodic systems and moving average do not directly impact inventory valuation under a specific cost-flow assumption.

Which One of the Following Cost-Flow Assumptions Provides the Lowest