The use of LIFO in accounting for a firm's inventory:
A)Usually matches the physical flow of goods through the business.
B)Is usually used for internal management purposes.
C)Usually provides a better match of expenses with revenues.
D)None of these is correct.

Question

Quizplus · Accepted Answer

LIFO (last-in, first-out) assumes that the most recently purchased items in inventory are sold first. This often results in a better matching of expenses with revenues as it allocates the most recent costs to the goods sold. Therefore, choice C is correct. Choice A is incorrect as LIFO does not necessarily match the physical flow of goods. Choice B is also incorrect as LIFO is primarily used for external financial reporting purposes. Finally, choice D is incorrect as choice C is correct.

The Use of LIFO in Accounting for a Firm's Inventory