LIFO method of inventory costing will yield the lowest gross profit and income.
The last in, first out (LIFO) approach for inventory accounting is utilized.
According to LIFO, expenses are deducted starting with the expenditures of the most recent goods that were bought (or produced).
Only in the United States is LIFO practiced, and it is governed by generally accepted accounting rules (GAAP).
The average cost approach and first in, first out (FIFO) are other techniques for accounting for inventories.
When prices are rising, using LIFO often reduces net revenue but offers tax benefits.
Hence, When purchase costs of inventory regularly decline, the LIFO method of inventory costing will yield the lowest gross profit and income.
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