If prices are rising,which inventory cost flow method will produce the lowest amount of cost of goods sold?
A)LIFO
B)FIFO
C)Weighted average
D)LIFO,FIFO,and weighted average will all produce equal amounts.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the oldest inventory items are sold first, so in a period of rising prices, the cost of goods sold will be based on the lower costs of the older inventory, resulting in a lower cost of goods sold compared to LIFO or weighted average.

If Prices Are Rising,which Inventory Cost Flow Method Will Produce