When Comparing the Average and FIFO Inventory Cost Formulas During

Multiple Choice

When comparing the average and FIFO inventory cost formulas during a period when prices are rising, which of the following statements is correct?

A) FIFO will result in a lower inventory balance reported on the balance sheet.
B) Average will result in a higher cash flow.
C) FIFO will result in a higher profit reported on the income statement.
D) Average will result in a higher gross profit reported on the income statement.