Which inventory valuation method mimics the actual flow of goods for most businesses?

Question

Quizplus · Accepted Answer

The FIFO (first-in, first-out) method assumes that the oldest items in inventory are sold first. This method generally mimics the actual flow of goods for most businesses, as they tend to sell their oldest inventory first in order to prevent spoilage or obsolescence. Additionally, under FIFO, the cost of goods sold reflects the most recent costs incurred by the business, which is important for accurately tracking profitability.

Which Inventory Valuation Method Mimics the Actual Flow of Goods