when purchase costs regularly rise, fifo reports the lowest cost of goods sold, which yields the highest…

when purchase costs regularly rise, fifo reports the lowest cost of goods sold, which yields the highest gross profit and net income. true or false true false

when purchase costs regularly rise, fifo reports the lowest cost of goods sold, which yields the highest gross profit and net income. true or false true false

Answer

Brief Explanations:

Under FIFO (First - In, First - Out), when purchase costs are rising, the oldest (and lower - cost) inventory items are assumed to be sold first. This results in a lower cost of goods sold (COGS). Since gross profit = sales - COGS and net income is calculated after considering other expenses (but COGS is a major component), a lower COGS leads to a higher gross profit and net income.

Answer:

True