My Learning Cart

In a period of deflation, which inventory method would likely result in higher e

Practice Questions

Q1
In a period of deflation, which inventory method would likely result in higher ending inventory values?
  1. FIFO
  2. LIFO
  3. Weighted Average Cost
  4. All methods equally

Questions & Step-by-Step Solutions

In a period of deflation, which inventory method would likely result in higher ending inventory values?
  • Step 1: Understand what deflation means. Deflation is when prices of goods decrease over time.
  • Step 2: Learn about inventory methods. FIFO stands for 'First In, First Out', meaning the oldest inventory costs are used first.
  • Step 3: In a deflationary period, older inventory costs are lower than newer inventory costs.
  • Step 4: When using FIFO during deflation, the company sells the older, cheaper inventory first.
  • Step 5: This means the remaining inventory (the newer, more expensive items) will have a higher value.
  • Step 6: Therefore, FIFO will result in higher ending inventory values in a deflationary period.
No concepts available.
School
School
College
College
Degree
Degree
Competitve
Competitve
Skills
Skills
Soulshift Feedback ×

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?

Not likely Very likely