In a period of rising prices, ending inventory using FIFO will be ______ ending inventory determined using weighted average.

Question

Quizplus · Accepted Answer

In a period of rising prices, FIFO (first-in, first-out) method assumes that the items purchased first are also the items sold first, and the items purchased last remain in the inventory. Therefore, under FIFO, the cost of ending inventory will reflect the current, higher purchase prices resulting in a higher ending inventory valuation as compared to the weighted average method which averages the cost of all items purchased during the period.

In a Period of Rising Prices, Ending Inventory Using FIFO