FIFO results in a more accurate portrayal of ending inventory on the balance sheet than does moving-weighted-average.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the oldest inventory items are sold first, which may not accurately reflect the current market value of ending inventory if prices have changed significantly. Moving-weighted-average cost method averages out the cost of goods available for sale and tends to smooth out price fluctuations, potentially offering a more accurate reflection of current market values in the ending inventory on the balance sheet.

FIFO Results in a More Accurate Portrayal of Ending Inventory