If inventory costs are decreasing, profit will be highest if the inventory method used is:
A) FIFO.
B) LIFO.
C) weighted average.
D) It is not possible to answer the question.

Question

Quizplus · Accepted Answer

When inventory costs are decreasing, the Last In, First Out (LIFO) method results in the highest profit because it matches the most recent, lower-cost inventory against current revenues, thus reducing the cost of goods sold and increasing profit.

If Inventory Costs Are Decreasing, Profit Will Be Highest If