Which statement is correct?
A) LIFO assumes that cost of sales consists of the oldest purchases.
B) LIFO assumes that stock at end consists of the most recent purchases.
C) LIFO assumes the last goods purchased are the first goods sold.
D) LIFO assumes the first goods purchased are the first goods sold.

Question

Quizplus · Accepted Answer

LIFO stands for "last in, first out," which means that the last goods purchased are assumed to be the first goods sold. This assumes that the cost of goods sold consists of the most recent purchases, not the oldest ones (option A). LIFO does not assume that the ending inventory consists of the most recent purchases (option B) or the first goods purchased are the first goods sold (option D).

Which Statement Is Correct