Which Inventory Method Gives the Most Realistic Net Income

question 65

Multiple Choice

Which inventory method gives the most realistic net income?

• A)FIFO, because it uses cost in the order in which they were incurred
• B)LIFO, because it includes the most recent costs in cost of goods sold
• C)Average-cost, because it averages old and recent costs
• D)The answer depends on whether prices are rising or falling.

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