Question

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the LIFO method. FIFO method. Average-cost method. Tax method.

Answer 1

Answer:

LIFO method

Explanation:

The last-in, first-out (LIFO) inventory method values the cost of goods sold (COGS) using the price of the last purchases made by the company. This valuation method is accepted by the US GAAP and it is generally applied when the replacement costs are continuously increasing.

On the other hand, the IFRS (the international accounting standard) does not allows LIFO, it only accepts FIFO.