If inventory prices are rising the method of inventory valuation that gives the highest profit and the highest ending inventory is:

Question

Quizplus · Accepted Answer

Under FIFO, the oldest inventory items are sold first which means that the cost of goods sold reflects the lowest prices of the inventory items. This results in higher profits when prices are rising, as the cost of goods sold will be lower, and also leads to a higher ending inventory valuation as the more expensive inventory items are still on hand.

If Inventory Prices Are Rising the Method of Inventory Valuation