If prices are rising, which inventory cost flow method will produce the lowest amount for Cost of Goods Sold?
A) FIFO
B) LIFO
C) Weighted Average
D) Either B or C

Question

Quizplus · Accepted Answer

Under FIFO (First-In-First-Out), the oldest inventory items are sold first, which means that cost of goods sold will reflect the lower prices of the items purchased earlier. Therefore, in a rising price scenario, the use of FIFO will result in a lower cost of goods sold compared to LIFO and Weighted Average methods.

If Prices Are Rising, Which Inventory Cost Flow Method Will