Supply Chain Management Professional (SCMP) · Question
Which inventory valuation method results in the lowest ending inventory value and highest cost of goods sold during periods of rising prices?
LIFO assumes the last units purchased are the first ones sold, which, during inflation, means higher cost items are debited first, leading to lower ending inven
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Question: Which inventory valuation method results in the lowest ending inventory value and highest cost of goods sold during periods of rising prices?
Answer options: ✅ LIFO (Last-In, First-Out)
- FIFO (First-In, First-Out)
- Weighted Average
- Specific Identification
Correct answer: LIFO (Last-In, First-Out)
Explanation: LIFO assumes the last units purchased are the first ones sold, which, during inflation, means higher cost items are debited first, leading to lower ending inventory.
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