When merchandise sold is assumed to be in the order in which the expenditures were made,the inventory method is called
A)first-in,last-out.
B)last-in,first-out.
C)first-in,first-out.
D)average cost.

Question

Quizplus · Accepted Answer

First-in, first-out assumes that the first items purchased are the first ones sold, so the cost of goods sold is calculated based on the earliest inventory costs. This method works well for businesses with perishable or time-sensitive goods, where older inventory needs to be sold before it becomes obsolete.

When Merchandise Sold Is Assumed to Be in the Order