In a period of rising prices, the inventory method which tends to give the highest reported net income is
A) base stock.
B) first-in, first-out.
C) last-in, first-out.
D) weighted-average.

Question

Quizplus · Accepted Answer

In a period of rising prices, the first-in, first-out (FIFO) inventory method tends to give the highest reported net income, as the cost of goods sold will be based on the lower, earlier inventory costs. This will result in a higher gross profit margin and higher net income.

In a Period of Rising Prices, the Inventory Method Which