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Question
Under inflationary conditions, which of the following method of inventory valuation will show lowest cost of goods sold ?
Under inflationary conditions, which of the following method of inventory valuation will show lowest cost of goods sold ?
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Solution
The correct option is D FIFO
FIFO results in the highest ending inventory, the lowest cost of goods sold, and the highest net income. This is because the oldest and lowest costs are allocated to cost of goods sold.
FIFO results in the highest ending inventory, the lowest cost of goods sold, and the highest net income. This is because the oldest and lowest costs are allocated to cost of goods sold.
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