The use of the FIFO method of inventory valuation during high inflationary periods produces lower profits on the income statement and results in lower taxes.

Question

Quizplus · Accepted Answer

During high inflationary periods, the FIFO (First In, First Out) method of inventory valuation typically results in higher profits on the income statement because older, lower-cost inventory is sold first, leading to lower cost of goods sold and higher gross margins. This can result in higher taxes due to the higher taxable income.

The Use of the FIFO Method of Inventory Valuation During