In a period of rising prices,which of the following inventory methods generally results in the highest gross margin figure?
A)Cannot tell without more information
B)LIFO
C)FIFO
D)Average-cost

Question

Quizplus · Accepted Answer

In a period of rising prices, FIFO (First-In-First-Out) inventory method generally results in the highest gross margin figure as it assumes that the first inventory items purchased are the first ones sold. This results in the costs of the oldest inventory being matched against current revenue, resulting in higher gross profits compared to LIFO (Last-In-First-Out) and average-cost methods.

In a Period of Rising Prices,which of the Following Inventory