Which of the following statements regarding inventories is correct?
A) FIFO assumes that the costs of the earliest goods acquired are the last to be sold.
B) FIFO seldom coincides with the actual physical flow of inventory.
C) Under FIFO, the ending inventory is based on the latest units purchased.
D) It is generally good business management to sell the most recently acquired goods first.

Question

Quizplus · Accepted Answer

Under FIFO (First-In, First-Out), the ending inventory is based on the costs of the latest units purchased, as the earliest goods acquired are assumed to be sold first.

Which of the Following Statements Regarding Inventories Is Correct