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Basic Question 5 of 16
In a period of declining prices, which of the following statements would be true?
B. FIFO would produce higher gross profit margin percentages than would LIFO.
C. Average costs would produce higher gross profit margin percentages than would LIFO.
D. FIFO would produce higher gross profit margin percentages than would average costs.
A. LIFO would produce higher gross profit margin percentages than would average costs.
B. FIFO would produce higher gross profit margin percentages than would LIFO.
C. Average costs would produce higher gross profit margin percentages than would LIFO.
D. FIFO would produce higher gross profit margin percentages than would average costs.
User Contributed Comments 1
| User | Comment |
|---|---|
| teddajr | During Price decline, COGS-> LIFO < AvgCost < FIFO But, In Price Increase, COGS-> FIFO < AvgCost < LIFO |
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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.