Which of the following inventory costing methods yields the highest cost of goods sold during a period of rising inventory costs?

Question

Quizplus · Accepted Answer

Under the LIFO method, the most recent inventory purchases are assumed to be sold first. Therefore, during a period of rising inventory costs, the cost of goods sold will reflect the higher cost of the most recent purchases, resulting in a higher cost of goods sold. On the other hand, under the FIFO method, the oldest inventory is assumed to be sold first, resulting in a lower cost of goods sold during a period of rising inventory costs. The specific identification method and the weighted-average method would reflect an average cost of all inventory, and would not necessarily result in the highest cost of goods sold during a period of rising inventory costs.

Which of the Following Inventory Costing Methods Yields the Highest