When inventory prices are declining, the FIFO method will generally yield a gross margin that is:

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Quizplus · Accepted Answer

When inventory prices are declining, the FIFO (First-In, First-Out) method generally yields a lower gross margin compared to the weighted-average method. This is because FIFO assumes that the oldest (and in a declining price environment, the most expensive) inventory is sold first, leading to higher cost of goods sold (COGS) and, consequently, a lower gross margin.

When Inventory Prices Are Declining, the FIFO Method Will Generally