When valuing items in inventory for financial reporting purposes,generally accepted accounting practices require firms to value the cost of goods sold by assuming that the items that have been in inventory the longest are the ones that are sold.

Question

Quizplus · Accepted Answer

The statement describes the Last-In, First-Out (LIFO) method, but generally accepted accounting principles (GAAP) allow for multiple inventory valuation methods, including First-In, First-Out (FIFO), LIFO, and weighted average cost. FIFO assumes the oldest inventory items are sold first, not LIFO.

When Valuing Items in Inventory for Financial Reporting Purposes,generally Accepted