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 be the same under these methods.

Question

Quizplus · Accepted Answer

When prices are increasing, LIFO (Last In, First Out) inventory method will produce the highest cost of goods sold because it assumes that the most recently purchased items are the first ones sold, and that the older, cheaper inventory remains unsold. This results in a higher cost of goods sold as the older, lower-cost inventory is not accounted for until the end.

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