Which of the following statements is correct with respect to inventories?
A) The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
B) It is generally good business management to sell the most recently acquired goods first.
C) Under FIFO the ending inventory is based on the latest units purchased.
D) FIFO seldom coincides with the actual physical flow of inventory.

Question

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) method, the costs of the earliest goods acquired are the first to be charged to cost of goods sold, leaving the costs of the most recently acquired goods to remain in ending inventory. This means the ending inventory is based on the prices of the latest units purchased.

Which of the Following Statements Is Correct with Respect to Inventories