Financial & Managerial Accounting 13th Edition by Carl Warren , James Reeve,Jonathan Duchac

Exercise 4

If merchandise inventory is being valued at cost and the price level is decreasing, which of the three methods of costing-FIFO, LIFO, or weighted average cost-will yield (a) the highest inventory cost, (b) the lowest inventory cost, (c) the highest gross profit, and (d) the lowest gross profit?