During a year of rising prices and increasing inventory, which cost flow assumption would measure the smallest working capital ratio?

Question

Quizplus · Accepted Answer

LIFO assumes that the most recently purchased inventory is sold first, which leads to higher cost of goods sold and lower ending inventory values. In a year of rising prices and increasing inventory, this would result in a smaller working capital ratio because the cost of goods sold would be higher and the inventory value would be lower compared to FIFO or average cost methods.

During a Year of Rising Prices and Increasing Inventory, Which