question archive When the cost of purchasing inventory is declining, which inventory cost flow method will produce the highest amount of cost of goods sold? Weighted average LIFO FIFO LIFO, FIFO, and weighted average will all produce the same amount of cost of goods sold
When the cost of purchasing inventory is declining, which inventory cost flow method will produce the highest amount of cost of goods sold? Weighted average LIFO FIFO LIFO, FIFO, and weighted average will all produce the same amount of cost of goods sold
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When the cost of purchasing inventory is declining, which inventory cost flow method will produce the highest amount of cost of goods sold?
-
- Weighted average
- LIFO
- FIFO
- LIFO, FIFO, and weighted average will all produce the same amount of cost of goods sold.
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Answer:
C )
Explanation
Under the FIFO method, the first purchased items should be sold first. If the cost of the inventory is declining, the cost of the first purchased items is more than the last purchased items. Therefore, the cost of goods sold is more under the FIFO method.
