Question

Which cost flow assumption generally results in the highest reported amount for ending inventory when inventory costs are rising

Answer 1

FIFO method (first in, first out)

Step-by-step explanation:

When inventory costs are increasing, the FIFO method (first in, first out) results in the lowest cost of goods sold, which in turn result in the highest ending inventory value. On the other hand, the LIFO method (last in, first out) results in the highest cost of goods sold and the lowest ending inventory value. Goods purchased last will have a higher cost since the price of the merchandise increased during the year.