What inventory valuation method assumes that the oldest units purchased are the first ones sold, resulting in higher net income during inflationary periods?

Explanation

• FIFO assumes that the earliest inventory acquired is sold first, leaving higher recent purchase costs in ending inventory.
• During periods of inflation, FIFO results in lower Cost of Goods Sold (COGS), higher net income, and higher ending inventory values.
• Note that IFRS explicitly prohibits the use of LIFO, whereas US GAAP permits it.