Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items:
-Prices are declining; gross margin is higher with this method.
A)LIFO
B)FIFO

Question

Quizplus · Accepted Answer

Under LIFO, the most recent purchases are assumed to be sold first. When prices are declining, this means that the cost of goods sold will be higher, resulting in a higher gross margin.

Identify Which Inventory Costing Method (LIFO or FIFO) Achieves the Effect