In a period of rising prices,which of the following inventory methods generally results in the lowest gross margin figure?

Question

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LIFO (Last-In, First-Out) assumes that the most recently purchased inventory is sold first, which means that the cost of goods sold is based on the most recently purchased and most expensive items. This results in a lower gross margin when prices are rising because it does not reflect the lower cost of earlier purchased inventory. Therefore, LIFO generally results in the lowest gross margin figure in a period of rising prices.

In a Period of Rising Prices,which of the Following Inventory