A major advantage of the FIFO method is that it allows managers to judge the performance of the current period independently of the performance of the prior period.

Question

Quizplus · Accepted Answer

Since FIFO (First-In, First-Out) assumes that the oldest inventory items are sold first, the cost of goods sold (COGS) will reflect the current cost of inventory. This allows managers to measure the current period's profitability without being influenced by past inventory costs. Therefore, the statement is true.

A Major Advantage of the FIFO Method Is That It