JAMB Accounting 2011 Objective — Question 16

Question 16 of 49 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2011 Objective paper, with the correct answer and a full explanation.

In a period of declining price, which of the following methods would result in higher profit?

A. A. FIFO
B. B. Simple average
C. C. LIFOCorrect
D. D. Weighted average

Explanation

In a period of declining prices, LIFO (Last In First Out) values cost of goods sold using the most recent (lower) prices, leaving older (higher-cost) stock in inventory, which results in a higher reported profit.

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