Chapter 6, Problem 18QS

To determine

Effect of Inventory valuation method on Gross profits and Inventory prices in the scenario of rising prices: In case of rising prices, cost of goods sold is higher in case of LIFO method as the inventory are issued at recent prices which are higher in price and Inventory at the end if higher in case of FIFO method which also represent the current replacement cost of inventory, as the material is issued from inventory of historical cost which have been arrived in stores earlier.

To Determine: The Determination of method under various situations of rising prices.