The correct answer is: A. LIFO
LIFO stands for Last In, First Out. It is a method of inventory valuation that assumes that the most recently purchased items are sold first. This means that the cost of goods sold is based on the most recent prices, which can result in a lower cost of goods sold and a higher net income.
FIFO stands for First In, First Out. It is a method of inventory valuation that assumes that the oldest items are sold first. This means that the cost of goods sold is based on the oldest prices, which can result in a higher cost of goods sold and a lower net income.
The Simple Average Method is a method of inventory valuation that averages the cost of all items in inventory. This method can result in a cost of goods sold that is somewhere between the cost of goods sold under LIFO and FIFO.
Under LIFO, current assets will be valued at lower value at the time of value increasing/appreciation because the cost of goods sold will be based on the most recent prices, which are lower than the prices of the older items in inventory.
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