When inventory costs are increasing the FIFO costing method

When inventory costs are increasing, the FIFO costing method will generally yield a cost of goods sold that is: 0 A, equal to cost of goods sold under the LIFO method. O B. equal to the gross profit under the LIFO method. c, higher than cost of goods sold under the LIFO method. 0 D. lower than cost of goods sold under the LIFO method.

Solution

D.Lower than cost of goods sold under the LIFO method.

FIFO method accounts the goods purchased early as sold, so in the case of increasing inventory cost, FIFO will yield a cost of goods sold that is lower than cost of goods sold under LIFO method.

LIFO records the goods purchased later as sold, so it will show a higher cost of goods sold than FIFO when costs are increasing.