During periods of decreasing unit costs,use of the FIFO inventory method results in lower gross profit than would use of the LIFO method.

Question

Quizplus · Accepted Answer

FIFO assumes that the first units purchased are the first units sold. During periods of decreasing unit costs, this means that the cost of goods sold will be higher under FIFO than under LIFO, resulting in lower gross profit.

During Periods of Decreasing Unit Costs,use of the FIFO Inventory