During periods of inflation which method will yield the smallest ending inventory and the largest cost of goods sold?

Question

Quizplus · Accepted Answer

LIFO (Last-in, first-out) assumes that the last inventory purchased or produced is sold first. During inflation, the price of goods increases over time, which means that the most recent inventory purchased will be the most expensive. Therefore, using LIFO during inflation will result in the smallest ending inventory as the oldest, lower-priced inventory items will be sold first. It will also result in the largest cost of goods sold as the more expensive inventory items are used up earlier in the accounting period.

During Periods of Inflation Which Method Will Yield the Smallest