During the period of rising prices, higher profits can be shown by valuing stock at:

The correct answer is: B. F.I.F.O. basis

First-in, first-out (FIFO) is a method of accounting for inventory that assumes that the first goods purchased are also the first goods sold. This means that the cost of goods sold is based on the cost of the oldest inventory items, and the ending inventory is based on the cost of the most recent inventory items.

During a period of rising prices, FIFO will result in a higher cost of goods sold and a lower ending inventory. This will, in turn, result in higher profits.

The other options are incorrect because they do not result in higher profits during a period of rising prices.

• L.I.F.O. (last-in, first-out) is a method of accounting for inventory that assumes that the last goods purchased are also the first goods sold. This means that the cost of goods sold is based on the cost of the newest inventory items, and the ending inventory is based on the cost of the oldest inventory items. During a period of rising prices, LIFO will result in a lower cost of goods sold and a higher ending inventory. This will, in turn, result in lower profits.
• Simple average price is
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