Q201
Which one of the following methods of inventory costing yields highest taxable income?
A.
FIFO
AnswerB.
LIFO
C.
AVCO or averrage cost
D.
Standard cost method
Answer: Option A
Solution
Answer: Option A
Solution:
FIFO methods of inventory costing yields highest taxable income. First-in, first-out, or FIFO, applies the earliest costs first. In rising markets, FIFO yields the lowest cost of goods sold and the highest taxable income.