When prices are increasing,which inventory method will produce the highest cost of goods sold?
A)FIFO.
B)LIFO.
C)Average cost.
D)Cost of goods sold will not change.

Question

Quizplus · Accepted Answer

LIFO method assumes that the latest acquired inventory is sold first, which means that the cost of goods sold will be based on the higher-priced inventory. Therefore, during inflationary periods, the LIFO method will produce the highest cost of goods sold compared to FIFO and average cost methods.

When Prices Are Increasing,which Inventory Method Will Produce the Highest