Which of the following does not correctly describe the FIFO costing method?
A)This method assumes that the oldest inventory costs are the first costs recorded for cost of goods sold.
B)This method assumes that most current inventory costs are the first costs recorded for cost of goods sold.
C)This method approximates the physical flow of most types of goods.
D)This method is permitted under private entity GAAP

Question

Quizplus · Accepted Answer

The description in option B is not correct for FIFO costing method. Instead, it is the opposite of the correct description. FIFO assumes that the oldest inventory costs are the first costs recorded for cost of goods sold. Option A correctly describes the FIFO costing method. Options C and D are also correct descriptions of the FIFO costing method.

Which of the Following Does Not Correctly Describe the FIFO