Two companies report the same cost of goods available for sale but each employs a different inventory costing method.If the price of goods has increased during the period, then the company using
A)LIFO will have the highest ending inventory.
B)FIFO will have the highest cost of goods sold.
C)FIFO will have the highest ending inventory.
D)LIFO will have the lowest cost of goods sold.

Question

Quizplus · Accepted Answer

When prices are rising, FIFO (First-In, First-Out) results in the oldest, cheaper costs being assigned to the cost of goods sold, leaving the newer, more expensive costs in ending inventory, thus resulting in a higher ending inventory value.

Two Companies Report the Same Cost of Goods Available for Sale