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Basic Question 2 of 16
Which inventory cost flow assumption normally will yield the highest cost of goods sold during a period of declining prices?
B. FIFO
C. LIFO
A. Weighted average
B. FIFO
C. LIFO
User Contributed Comments 6
| User | Comment |
|---|---|
| Stace | Definitely B |
| treakj | But only if the first purchase cost is lower than the recently purchased cost, isnt it? Otherwise the LIFO would still show a higher COGS. |
| surob | treakj: if not given, assume the price is rising. |
| ddrmax | declining pricing.... |
| ericczhang | "...during a period of declining prices" |
| johntan1979 | FEE-FI-FO-FUM! |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
calculate and explain how inflation and deflation of inventory costs affect the financial statements and ratios of companies that use different inventory valuation methods
CFA® 2025 Level I Curriculum, Volume 2, Module 6.