The FIFO inventory cost formula assumes that the cost of the latest units purchased is
A) the last to be allocated to ending inventory.
B) the first to be allocated to ending inventory.
C) the first to be allocated to cost of goods sold.
D) allocated to the average cost of goods sold or ending inventory.

Question

Quizplus · Accepted Answer

The FIFO (First-In, First-Out) inventory cost formula assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold, meaning the cost of the latest units purchased would be the last to be allocated to ending inventory.

The FIFO Inventory Cost Formula Assumes That the Cost of the Latest