In a period of falling prices,the inventory costing method that will cause the company to have the lowest cost of goods sold is:
A) LIFO.
B) FIFO.
C) Weighted average.
D) Specific identification.

Question

Quizplus · Accepted Answer

LIFO (Last-In-First-Out) assumes that the most recent inventory purchased or produced is sold first, which in a period of falling prices means that the cost of goods sold will be based on the higher prices of the older inventory. This results in a lower cost of goods sold and a higher value of ending inventory, which is advantageous for the company in periods of falling prices. Therefore, LIFO is the best choice in this scenario.

In a Period of Falling Prices,the Inventory Costing Method That