In a period of inflation (prices are rising), which inventory cost formula will result in higher net income?
A) FIFO
B) average cost
C) Cost of goods sold for the period will be the same under both formulas.
D) There would be no effect on net income.

Question

Quizplus · Accepted Answer

During inflation, FIFO (First-In, First-Out) results in lower cost of goods sold because older, cheaper costs are matched against revenues, leading to higher net income.

In a Period of Inflation (Prices Are Rising), Which Inventory