The ______________ method of inventory costing is most likely to lead to inflation-induced profits.
A) FIFO
B) Specific item
C) Weighted average
D) Lower of cost or market

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method assumes that the first items purchased are the first ones sold, which means that the ending inventory consists of the most recent purchases. This method is most likely to lead to inflation-induced profits because the cost of the goods sold includes the lower costs of the earlier purchases, leading to higher profits when prices are rising.

The ______________ Method of Inventory Costing Is Most Likely to Lead