FIFO reports higher gross profit and net income than the LIFO method when

A) prices are increasing
B) prices are decreasing
C) prices remain stable
D) prices are reduced by 50%

FIFO

"First In, First Out," an inventory valuation method where the first items placed in inventory are the first sold.

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the basic profit from buying and selling goods or services.

LIFO Method

Last In, First Out method; an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.