Which of the 3 methods of inventory costing (Lifo, Fifo, or Average Cost) will result in the lowest annual income tax expense for the year if prices to acquire the inventory have been steadily rising during the year?

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.