The FIFO system of inventory valuation is recommended because __________.
A) it reflects truer inventory costs
B) it gives a more accurate cost of goods sold value
C) it makes net income lower than LIFO, which means less cash paid for taxes
D) it reflects truer inventory costs and it gives a more accurate cost of goods sold value
E) All of the answers are correct.

Question

Quizplus · Accepted Answer

FIFO reflects truer inventory costs and provides a more accurate cost of goods sold value by assuming that the oldest inventory items are used first, which aligns with the actual flow of goods in many businesses.

The FIFO System of Inventory Valuation Is Recommended Because __________