The acquisition cost of a certain raw material changes frequently.The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the

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The FIFO method assumes that the first items purchased are the first items sold or used, which would result in the highest possible cost of goods sold and the lowest possible ending inventory value. This would ensure that the book value of the inventory remains the same regardless of fluctuations in the acquisition cost of the raw material.

The Acquisition Cost of a Certain Raw Material Changes Frequently