In a period of rising prices, the inventory method which tends to give the highest reported inventory is
A) FIFO.
B) moving average.
C) specific identification.
D) weighted-average.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first units purchased or produced are the first ones sold, so the inventory on hand consists of the most recently purchased or produced units. In a period of rising prices, this method tends to give the highest reported inventory because the older, less expensive units are assumed to have been sold, leaving the more expensive units in ending inventory.

In a Period of Rising Prices, the Inventory Method Which