Respuesta :
The correct answer is Option A.
FIFO reports higher gross profit and net income than the LIFO method when prices are increasing.
What is Gross Profit?
- Gross profit is the amount of money a business makes after deducting costs for producing, distributing, and selling its goods or services.
- A company's income statement will show gross profit, which is derived by deducting cost of goods sold (COGS) from revenue (sales). The income statement of a business will contain these numbers. Sales profit or gross income are other names for gross profit.
- Gross profit measures how well a business uses its work force and resources to produce goods and services. The main focus of the metric is on variable costs, or expenses that change depending on the volume of output.
The FIFO technique refers to an inventory system where the most recent purchases make up the ending inventory and the first products acquired are assumed to be sold first (i.e., First In First Out).
The LIFO approach, on the other hand, is the exact opposite. The first item purchased makes up the ending inventory, and the most recent purchases are sold first (last item that is in is sold first).
Know more about Gross Profit with the help of the given link:
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