If unit costs are rising and inventory levels are constant or increasing, which method of inventory valuation will result in the lowest net income? Why?

A. Specific identification method includes the most recent costs in cost of goods sold. Therefore, it results in higher cost of goods sold and lower income if prices are increasing. In addition, specific identification method includes the older, lower costs in ending inventory. This results in lower inventory valuations than moving-average method.

B. FIFO includes the oldest costs in cost of goods sold. Therefore, it results in higher cost of goods sold and lower income if prices are increasing. In addition, FIFO includes the older, lower costs in ending inventory. This results in lower inventory valuations than LIFO.

C. Moving-average method includes the oldest costs in cost of goods sold. Therefore, it results in higher cost of goods sold and lower income if prices are increasing. In addition, moving-average method includes the older, lower costs in ending inventory. This results in lower inventory valuations than specific identification method.

D. LIFO includes the most recent costs in cost of goods sold. Therefore, it results in higher cost of goods sold and lower income if prices are increasing. In addition, LIFO includes the older, lower costs in ending inventory. This results in lower inventory valuations than FIFO.