Question

in a period of rising prices, the inventory method which tends to give the highest cost of goods sold value is

Answer 1

Answer:

First In, First Out (FIFO).

Explanation:

FIFO is an acronym for "First In, First Out" and it assumes oldest unit of inventory is sold first, meaning goods that were first added to inventory are the first goods removed from inventory for sale and are recorded as sold first.

FIFO can be defined as an accounting methods used in managing costs related to inventory, stock repurchases at different times and financial activities associated with monetary costs a company had tied up within inventory of feedstocks, raw materials, produced goods, and equipment parts.

Simply stated, FIFO is an accounting methods used for the valuation of the cost of goods sold and ending inventory of a company.

In a period of rising prices, the inventory method which tends to give the highest cost of goods sold value is First In, First Out (FIFO). This is because the more recent costs represent the higher (rising) net income and a higher (rising) inventory valuation costs.