In periods of rising prices, _____ method of inventory valuation will result in production being relatively undercharged.
First in First Out
The correct answer is option 1. The "First in First Out" (FIFO) method of inventory valuation results in the production being relatively undercharged in times of rising prices, as older (cheaper) inventory is used first, leaving the more expensive items in inventory.
Similar Questions
Which of the following statements is correct?
Which of the following statements is/are correct?
Statement-1: In periods of rising prices, the cost of production is lower in the FIFO method.
Statement-2: In periods of falling prices, the ending inventory is valued in the FIFO method at a price lower than that in case of the LIFO method.
Which of the following methods does NOT consider historical cost of inventory?
Under ______ method of Inventory valuation, the issues of materials are made at the price of materials or goods which have been ordered but not yet received.
If a firm purchases 100 units of goods on 1st Jan. @ Rs 4 p.u; 200 units on 8th Jan. @ Rs.5 p.u, 200 units on 24th Jan. @ Rs.6 p.u, and sold 200 units on 31st Jan, what will be the value of inventory sold on 31st Jan. according to the Weighted Price method when the firm follows Periodic Inventory System?
Valuing inventory at cost or net realizable value is based on which principle?
Important Questions from Inventory
Which of the following statements is correct?
Which statement is false with reference to dead stocks of a bank?
Which of the following statements is/are correct?
Statement-1: In periods of rising prices, the cost of production is lower in the FIFO method.
Statement-2: In periods of falling prices, the ending inventory is valued in the FIFO method at a price lower than that in case of the LIFO method.
Which of the following methods does NOT consider historical cost of inventory?
Under ______ method of Inventory valuation, the issues of materials are made at the price of materials or goods which have been ordered but not yet received.
