The method of inventory valuation that assumes that the earliest inventory acquired is the first to be sold is the:
A) LIFO method.
B) lower of cost and net realisable value method.
C) average cost method.
D) FIFO method.

Question

Quizplus · Accepted Answer

FIFO method assumes that the earliest inventory acquired is the first to be sold. It is widely used and provides a more accurate representation of the cost of goods sold and ending inventory than LIFO or average cost methods in periods of rising prices.

The Method of Inventory Valuation That Assumes That the Earliest