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

Question

Quizplus · Accepted Answer

The First-in, First-out (FIFO) method assumes that the first goods purchased are the first ones sold, and the last goods purchased are the ones that remain in inventory. This method yields the highest ending inventory when costs are rising because it assigns the oldest and lowest cost items to the cost of goods sold, leaving the most recent and highest cost items in inventory. As a result, the ending inventory value is calculated using the most recent and highest cost items, leading to a higher ending inventory value.

Which of the Following Inventory Costing Methods Yields the Highest