Which of the following inventory costing methods yields the highest cost of sales when costs are rising during the accounting period?

Question

Quizplus · Accepted Answer

Last-in, first-out (LIFO) inventory costing method yields the highest cost of sales when costs are rising during the accounting period. This is because under LIFO, the most recent and more expensive inventory items are recorded as sold first, whereas the cost of goods sold under first-in, first-out (FIFO) and average cost methods will be lower. Therefore, LIFO results in a higher cost of sales and lower net income, compared to FIFO and average cost methods. Specific unit cost method is a type of actual costing method, and the cost of goods sold will be determined based on the exact cost of each specific unit sold.

Which of the Following Inventory Costing Methods Yields the Highest