Accounting for IGCSE & O level - Final Statements (Section 6 - No. 42)
If a company is experiencing rising costs, which inventory valuation method is most likely to result in the lowest net income (profit)?
FIFO
LIFO
AVCO
Weighted Average
Explication
LIFO will result in the lowest net income because the most recent and highest prices are assigned to the cost of goods sold, reducing net income.