In a period of rising prices, ending inventory using FIFO will be ______________ ending inventory determined using average.
A) higher than
B) lower than
C) equal to
D) Cost formulas have no impact on ending inventory.

Question

Quizplus · Accepted Answer

In a period of rising prices, the FIFO (First-In, First-Out) method will result in a higher ending inventory value compared to the average cost method. This is because FIFO assumes that the oldest, and typically cheaper, inventory is sold first, leaving the newer, more expensive inventory as ending inventory.

In a Period of Rising Prices, Ending Inventory Using FIFO