If LIFO method is applied in case of rising prices inflation ........

Costing - Phase (I & II) Basics of Cost Control and Analysis

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If LIFO method is applied in case of rising prices (inflation):

It will provide lowest value of closing stock and low profit

It will provide highest value of closing stock and high profit

It will provide highest value of closing stock but lowest value of profit

It will provide highest value of profit but lowest value of closing stock

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Explanation:

In LIFO, the material purchased in the last lot is consumed first and thus the closing stock represents the material purchased first. According to this method, the price of the last batch of material purchased is charged for all issues of material, until all units from the last batch have been issued, after which the price of the previous batch of material purchased is charged. So, value of closing stock is low and so resulting profit is also low.