Question

Question 12 of 20

A business wants to maximize its net income in an economy with rising
costs. It should choose the method.
A. weighted average
B. gross profit
C. LIFO
D. FIFO

Answer 1

To maximize net income in an economy with rising costs, a business should choose the FIFO method.

Step-by-step explanation:

In order to maximize net income in an economy with rising costs, a business should choose the FIFO (First-in, First-out) method. FIFO assumes that the oldest inventory items are sold first, which means that the costs of goods sold (COGS) will reflect lower, older costs. This can help maintain higher profit margins compared to other methods such as LIFO (Last-in, First-out) or weighted average.

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