A company just starting business made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is

Question

A company just starting business made the following four inventory purchases in June:  A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is

Quizplus · Accepted Answer

The FIFO method assumes that the first items purchased are the first sold, which would result in the highest gross profit in a period of rising prices like June. The LIFO method assumes that the last items purchased are the first sold, which would result in a lower gross profit in a period of rising prices. The weighted average unit cost method would not necessarily result in the highest gross profit in this scenario. Therefore, the best choice would be A) the FIFO method.

A Company Just Starting Business Made the Following Four Inventory