CFA Practice Question
In a period of falling prices, the inventory method that gives the lowest possible value for ending inventory is:
A. LIFO
B. weighted average
C. FIFO
Explanation: The first-in-first-out (FIFO) method is based on the assumption that the costs of the first items acquired should be assigned to the first items sold, therefore ending inventory on hand is based on the most recent prices.
User Contributed Comments 2
| User | Comment |
|---|---|
| leo6fin | falling prices.. got to read the question right. |
| indrayudha | If the question were asking for "cost method", the lowest cost would be by using LIFO for similar situation. |