Economics · Inventory Valuation Methods
During a period of consistently falling prices, how will the closing inventory value calculated using FIFO compare to the AVCO (Weighted Average Cost) method?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1FIFO closing inventory will be valued lower than AVCO✓
- 2FIFO closing inventory will be valued higher than AVCO
- 3FIFO closing inventory will be equal to AVCO
- 4The effect depends entirely on the rate of inventory turnover
Correct answer
FIFO closing inventory will be valued lower than AVCO
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