The LIFO method of inventory valuation bases the cost of goods sold on the cost of:
A)Merchandise that has been held in inventory for the longest period of time.
B)Most recent merchandise purchased by the firm.
C)Actual units customers purchased.
D)Merchandise the firm acquired at the lowest cost.

Question

Quizplus · Accepted Answer

LIFO stands for "last in, first out", meaning that the cost of goods sold is based on the cost of the most recent merchandise purchased by the firm. This method assumes that the merchandise which has been most recently acquired is sold first.

The LIFO Method of Inventory Valuation Bases the Cost of Goods