In a Period of Rising Prices,which of the Following Inventory

question 110

Multiple Choice

In a period of rising prices,which of the following inventory methods generally results in the lowest gross margin figure?

• A) Cannot tell without more information
• B) LIFO
• C) FIFO
• D) Average-cost

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Definitions:

Merchandise Inventory Account

The merchandise inventory account represents the total cost of all merchandise that is available for sale by a retail or wholesale business during a specific accounting period.

Beginning Inventories

The value of all the inventory items that a company has in stock at the start of an accounting period.

Ending Inventories

The worth of merchandise ready for purchase at the closure of a financial period, determined by adding the initial stock and acquisitions, then subtracting the cost of goods sold.

Net Income

The total profit of a company after all expenses, including taxes and costs, have been subtracted from total revenue.