Asked by Tatiana Jones on May 04, 2024
Verified
During a period of steadily rising costs,the inventory valuation method that yields the highest reported net income is:
A) Specific identification method.
B) Average cost method.
C) Weighted-average method.
D) FIFO method.
E) LIFO method.
Rising Costs
An economic situation where the prices of goods, services, or factors of production increase over time.
FIFO Method
"First In, First Out," an inventory valuation method where goods purchased or produced first are sold or consumed first.
- Attain proficiency in and apply different inventory valuation tactics, such as FIFO, LIFO, Weighted Average, and Specific Identification.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
D
Explanation :
During periods of steadily rising costs, the FIFO (First-In, First-Out) method yields the highest reported net income. This is because the oldest, and typically cheaper, costs are recorded as the cost of goods sold, while the newer, more expensive inventory remains on the balance sheet. This results in lower cost of goods sold and higher reported net income compared to other methods.
Learning Objectives
- Attain proficiency in and apply different inventory valuation tactics, such as FIFO, LIFO, Weighted Average, and Specific Identification.