The main inventory methods include first-on first-out (FIFO), last-in last-out (LIFO), and the average cost.

Explain which of the three methods (FIFO, LIFO, or average cost) would result in the highest value of the gross profit for a company that operates in an inflationary economy.

Explain which of the three methods (FIFO, LIFO, or average cost) would result in the highest value of the net income for a company that operates in an inflationary economy.

Explain which of the three methods (FIFO, LIFO, or average cost) would result in the highest value of the the cost of goods sold (COGS) for a company that operates in an inflationary economy.

Explain which of the three methods (FIFO, LIFO, or average cost) would result in the highest value of the tax expense for a company that operates in an inflationary economy.

Discuss which inventory valuation method you would select for a small business operating in the United States?