In case of rising prices (inflation), FIFO method will:

A. provide lowest value of closing stock and profit

B. provide highest value of closing stock and profit

C. provide highest value of closing stock but lowest value of profit

D. provide highest value of profit but lowest value of closing stock

Answer: Option B

Solution(By Examveda Team)

In case of rising prices (inflation), FIFO method will provide highest value of closing stock and profit. The FIFO method is the standard inventory method for most companies. FIFO gives a lower-cost inventory because of inflation; lower-cost items are usually older.