question 1 lo 2 what is the effect of using fifo during a period of rising prices under a perpetual…

question 1 lo 2 what is the effect of using fifo during a period of rising prices under a perpetual inventory system? answer lower taxes paid than lifo higher gross profit than lifo higher cost of goods sold than average costing less net income than lifo i dont know yet

question 1 lo 2 what is the effect of using fifo during a period of rising prices under a perpetual inventory system? answer lower taxes paid than lifo higher gross profit than lifo higher cost of goods sold than average costing less net income than lifo i dont know yet

Answer

Brief Explanations:

In a period of rising prices under a perpetual inventory system, FIFO (First - In, First - Out) assumes that the first - acquired inventory is sold first. So, the cost of goods sold is based on the lower (earlier) costs, resulting in a lower cost of goods sold. Since Gross Profit = Revenue - Cost of Goods Sold, a lower cost of goods sold leads to a higher gross profit compared to LIFO (Last - In, First - Out), where the more expensive (recently acquired) inventory is assumed to be sold first.

Answer:

B. Higher gross profit than LIFO