When using the LIFO method under a perpetual inventory system, the latest units purchased before a sale are allocated to:
A) cost of sales.
B) beginning inventory.
C) ending inventory.
D) average inventory.

Question

Quizplus · Accepted Answer

Under the LIFO method using a perpetual inventory system, the costs of the most recent purchases are allocated to the cost of sales for the most recent sale. The cost of sales under the perpetual and periodic inventory systems will differ under LIFO as the periodic inventory system does not take into account the timing of the sale.

When Using the LIFO Method Under a Perpetual Inventory System