Identify Which Inventory Costing Method (LIFO or FIFO) Achieves the Effect

question 98

Multiple Choice

Identify which inventory costing method (LIFO or FIFO) achieves the effect listed in the following items:
-Prices are rising; profits are higher with this method.

• A)LIFO
• B)FIFO

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Definitions:

Net Sales

Net Sales is the total revenue from sales of goods or services, after deducting returns, allowances for damaged or missing goods, and discounts.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Ending Inventory

The final valuation of goods available for sale after accounting for all additions and subtractions during a financial period.

Beginning Inventory

The value of all the inventory that a company has at the start of an accounting period before any purchases or sales are made.