________ produces the highest cost of goods sold and the lowest gross profit when prices are increasing.

Question

Quizplus · Accepted Answer

LIFO (Last In First Out) assumes that the products or goods that were purchased most recently are sold first. This results in higher costs being matched with current revenue, leading to a higher cost of goods sold and lower gross profit. When prices are rising, the cost of the most recently acquired goods (which will be higher due to inflation) will be matched against sales revenue, causing the cost of goods sold to be higher and gross profit to be lower. Therefore, LIFO is the best choice in this scenario.

________ Produces the Highest Cost of Goods Sold and the Lowest