The LIFO method of inventory valuation can result in a company's ending inventory being valued at less than the inventory's replacement cost because LIFO inventory leaves the oldest costs in inventory.

Question

Quizplus · Accepted Answer

The LIFO method assumes that the most recent inventory purchases are sold first, leaving the oldest costs in inventory. Therefore, if replacement costs have increased over time, LIFO inventory will result in a lower ending inventory valuation than if the FIFO method was used.

The LIFO Method of Inventory Valuation Can Result in a Company's