Question

In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is:

a. FIFO.

b. average cost.

c. LIFO.

d. none of these.

Answer 1

c. LIFO.

Step-by-step explanation:

The inventory that arrives first will be sold first under the FIFO system and the remaining inventory will be sold later.

The system of LIFO is opposed to the method of FIFO. It ensures that the last units are sold first and the remaining units are sold later.

The weighted average is the calculation process by which the weighted average per unit is determined by taking into account the total cost of the units and divide it by the total units excluding the selling units

Due to the latest sale of the newly purchased items, the highest cost of goods sold is reported in the LIFO method.