The ________ method of inventory costing is least likely to lead to inflation-induced profits.
A) FIFO
B) LIFO
C) Weighted average
D) Lower of cost or market

Question

Quizplus · Accepted Answer

LIFO (Last In, First Out) method is least likely to lead to inflation-induced profits because it assumes that the most recently purchased items are sold first. During periods of inflation, this means that the higher cost of the more recently purchased inventory is matched against sales revenue, resulting in lower reported profits compared to other methods.

The ________ Method of Inventory Costing Is Least Likely to Lead