The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the order in which they were incurred.

Question

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The FIFO (First-In, First-Out) method assumes that the oldest inventory items are sold first, and therefore the costs associated with those items should be charged against revenues first, in the order in which they were incurred.

The FIFO Method of Costing Inventory Is Based on the Assumption