During inflationary periods,the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet approximating the current replacement cost.

Question

Quizplus · Accepted Answer

During inflationary periods, the FIFO (First-In, First-Out) method of costing inventory assumes that the oldest units are sold first, resulting in the recent and more expensive inventory items remaining in the ending inventory. This yields an inventory amount for the balance sheet that approximates the current replacement cost. Therefore, the statement is true.

During Inflationary Periods,the Use of the FIFO Method of Costing