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Which inventory valuation method provides for the highest profit in a period of inflation? LIFO FIFO...

Which inventory valuation method provides for the highest profit in a period of inflation?

LIFO

FIFO

Weighted Average

Specific Identification

Business   Accounting   
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Answer #1

FIFO

During the period of inflation First in First Out (FIFO) inventory valuation method provides highest profit. FIFO is the method of selling first purchased inventory means newer ones can be sold after the old ones are sold.And at the time of rising prices or inflation low cost (old inventory) inventory are sold at a higher price that results in higher profits, because the cost of making the older inventory were lower compared to newer inventory.

Hope you get that.

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