LIFO comes closer than FIFO to stating inventory on the balance sheet at current costs.

Question

Quizplus · Accepted Answer

LIFO (Last In, First Out) assumes the most recently acquired inventory is sold first, leaving older costs on the balance sheet, while FIFO (First In, First Out) assumes the oldest inventory is sold first, leaving more recent costs on the balance sheet. Therefore, FIFO more closely reflects current costs in the inventory valuation.

LIFO Comes Closer Than FIFO to Stating Inventory on the Balance