A method of allocating merchandise costs that assumes the sales in the period were made from the most recently purchased merchandise and the earliest merchandise bought remain in inventory is called the first-in, first-out method.

Question

Quizplus · Accepted Answer

The method described is the last-in, first-out (LIFO) method, not the first-in, first-out (FIFO) method. FIFO assumes the earliest purchased goods are sold first.

A Method of Allocating Merchandise Costs That Assumes the Sales