Which of the following inventory valuation methods generally creates a higher total inventory value and a lower cost of sales?

Question

Quizplus · Accepted Answer

FIFO (first in, first out) valuation method generally creates a higher total inventory value and a lower cost of sales compared to the LIFO (last in, first out) valuation method. In the FIFO method, the oldest inventory items are sold first, which means that the cost of goods sold reflects the cost of the oldest inventory items. This often results in a lower cost of goods sold and higher net income. Conversely, in the LIFO method, the newest inventory items are sold first, which means that the cost of goods sold reflects the cost of the newest inventory items. This often results in a higher cost of goods sold and lower net income.

Which of the Following Inventory Valuation Methods Generally Creates a Higher