Which inventory costing method results in the highest inventory balance during a period of rising prices?
A) LIFO
B) Weighted average cost
C) FIFO
D) Both FIFO and LIFO result in the same inventory balance

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) results in the highest inventory balance during a period of rising prices because it assigns the oldest costs (i.e., lowest prices) to the cost of goods sold, leaving the newest costs (i.e., highest prices) in inventory. This results in a higher valuation of remaining inventory on the balance sheet.

Which Inventory Costing Method Results in the Highest Inventory Balance