During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of goods sold is
A) FIFO
B) LIFO
C) average cost
D) weighted average

Question

Quizplus · Accepted Answer

In a period of consistently rising prices, LIFO (Last-in, First-out) method will result in reporting the greatest cost of goods sold because it assumes that the most recently purchased inventory is sold first, therefore the cost of goods sold will reflect the higher, more recent purchase prices. This will result in a lower ending inventory value and a higher cost of goods sold. Therefore, LIFO would be the best choice.

During a Period of Consistently Rising Prices, the Method of Inventory