In the first-in, first-out (FIFO) method of inventory valuation, the ending inventory is valued at the most recent cost, referred to as:
A) average cost.
B) opportunity cost.
C) replacement cost.
D) sunk cost.

Question

Quizplus · Accepted Answer

In the FIFO method, the assumption is that the first items purchased are the first items sold or used, so the ending inventory consists of the most recently purchased items. Therefore, the ending inventory is valued at the current cost, which is also known as the replacement cost.

In the First-In, First-Out (FIFO) Method of Inventory Valuation, the Ending