Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items:
-Prices are rising; profits are higher with this method.
A)LIFO
B)FIFO

Question

Quizplus · Accepted Answer

When prices are rising, the FIFO (First In, First Out) method results in higher profits because the older, lower-cost items are recorded as sold first, leaving the newer, higher-cost items in inventory. This leads to a higher ending inventory value and lower cost of goods sold, which in turn increases profits.

Identify Which Inventory Costing Method (LIFO or FIFO) Achieves the Effect