When a company uses LIFO, the Cost of sales correlates to the most recently purchased goods, and the ending inventory correlates to the oldest goods in stock.

Question

Quizplus · Accepted Answer

LIFO (Last In, First Out) assumes that the most recently purchased items are sold first, so the cost of sales reflects the cost of these recent purchases, while the ending inventory consists of older stock.

When a Company Uses LIFO, the Cost of Sales Correlates