If inventory costs are rising which method gives the highest profit?
A) Weighted average.
B) FIFO.
C) LIFO.
D) It is not possible to calculate which method gives the highest profit.

Question

Quizplus · Accepted Answer

When inventory costs are rising, using the FIFO method results in the highest profit because the older, cheaper inventory is sold first, leaving the more expensive inventory to be recorded as the cost of goods sold. This results in a higher net income and therefore higher profit.

If Inventory Costs Are Rising Which Method Gives the Highest