In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is
A) FIFO.
B) average cost.
C) LIFO.
D) None of these choices are correct.

Question

Quizplus · Accepted Answer

LIFO (Last-In-First-Out) method assumes that the last items purchased are the first ones sold, which means that the cost of goods sold consists of the recent, higher-priced inventory. Hence, during rising prices, LIFO method tends to give the highest reported cost of goods sold.

In a Period of Rising Prices, the Inventory Method Which