In applying the LIFO assumption in a perpetual inventory system, the cost of the units most recently purchased prior to sale is allocated first to the units sold.

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Quizplus · Accepted Answer

This statement is true. In LIFO (Last In, First Out), the cost of the most recently purchased units is assumed to be used up first, and therefore allocated first to units sold. In a perpetual inventory system, this allocation occurs continuously as units are sold, with the cost of the most recent purchase being used to calculate Cost of Goods Sold.

In Applying the LIFO Assumption in a Perpetual Inventory System