Of the three cost-flow assumptions, FIFO usually results in the smallest net income when inventory costs are rising and the largest net income when inventory costs are falling.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) usually results in the largest net income when inventory costs are rising because the older, lower-cost items are recorded as cost of goods sold first, leaving the newer, higher-cost items in inventory.

Of the Three Cost-Flow Assumptions, FIFO Usually Results in the Smallest