CFA Practice Question

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CFA Practice Question

Which inventory cost flow assumption normally will yield the highest cost of goods sold during a period of declining prices?

A. Weighted average
Correct Answer: B

The older, higher inventory purchases will be the costs that go into cost of goods sold under FIFO.

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!
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