Which one of the following inventory cost flow assumptions will result in a higher inventory turnover ratio in an
inflationary economy ?

Question

A. Weighted average.

B. FIFO.

C. LIFO.

D. Specific identification.

Alhassan Shaibu · Answer

C. Last In First Out (LIFO) Method

Sadiq ul Islam · Answer

C) LIFO will be correct answer.

I believe by using LIFO, Inventory valuations will be lesser than other inventory valuation methods in inflationary economy (e.g. FIFO, weighted/Moving average or specific identification) and COGS will be higher. This situation will consequently impact in higher inventory Turnover by using formula of COGS/ Inventory.

Hashim Nadir · Answer

Weighted average will help in high turnover ratio as it will show average profit which increase as per the cost of production variation

Moses Tindibale · Answer

Probably i prefer FIFO,SINCE ITS MORE EFFICIENCY AND EASY TO OPERATE.

Sohail Lone · Answer

B) FIFO: It will produce lower CGS and higher Net income

Mohammad Rashedul Haque Rashed · Answer

Answer............D. Specific identification

AYOOB BASHA HAWALDAR · Answer

C. LIFO - for manufacture Co.

D. Specific identification -for Trading

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Which one of the following inventory cost flow assumptions will result in a higher inventory turnover ratio in an inflationary economy ?

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