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JAMB Principles of Accounts 1997 Question 28

Question 28

Stock Valuation

Which of the following stock valuation methods is suitable under inflationary conditions?

  1. A.FIFO
  2. B.LIFO
  3. C.Simple average
  4. D.Weighted average.
Show the answer and explanation

Answer: B (LIFO)

Explanation

LIFO matches current (higher) costs against current revenue, so it suits periods of rising prices.