Ace Company is a retailer operating in an industry that experiences inflation (rising prices).Ace wants to maintain a high current ratio.Which inventory costing method should Ace consider using?
A)LIFO
B)Average
C)FIFO
D)No inventory costing method directly affects the current ratio.

Question

Quizplus · Accepted Answer

Using FIFO (First-In, First-Out) during inflation results in lower cost of goods sold and higher ending inventory values, which increases current assets and thus improves the current ratio.

Ace Company Is a Retailer Operating in an Industry That