Accounting · Inventory Valuation
An entity operates in an environment of consistently rising prices. It currently uses the First-In, First-Out (FIFO) method but is considering switching to the Weighted Average Cost (AVCO) method. What would be the effect on the financial statements of making this change?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The value of closing inventory would increase, and the cost of sales would decrease.
- 2The value of closing inventory would decrease, and the reported profit for the period would decrease.✓
- 3The value of closing inventory would decrease, but there would be no impact on the reported profit.
- 4The value of closing inventory would increase, and the reported profit for the period would increase.
Correct answer
The value of closing inventory would decrease, and the reported profit for the period would decrease.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Accounting?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Inventory Valuation MCQs →Want more practice questions on Inventory Valuation?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Accounting · Inventory Valuation