In a period of declining prices, the inventory method which tends to give the highest reported cost of goods sold is
A) specific identification.
B) average cost.
C) FIFO.
D) None of these are correct.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the oldest inventory is sold first. In a period of declining prices, this means that the cost of goods sold will be higher because the older inventory was purchased at a higher price.

In a Period of Declining Prices, the Inventory Method Which