If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

A) average cost
B) LIFO
C) FIFO
D) weighted average

Question

Megan Bromwell · Accepted Answer

Final Answer : B, Explanation :  LIFO (Last-In, First-Out) will yield the largest net income because it assumes that the most recently purchased inventory is sold first. As the purchase price is steadily falling, the cost of goods sold will be lower under LIFO, resulting in a higher net income.

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

A) average cost
B) LIFO
C) FIFO
D) weighted average

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Learning Objectives

Learning Objectives

Related questions

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?A) average costB) LIFOC) FIFOD) weighted average

Definitions

Learning Objectives

Learning Objectives

Related questions

If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

A) average cost
B) LIFO
C) FIFO
D) weighted average