FIFO charges the newest costs against revenues on the income statement thus matching the current cost of replacing the units with current revenues.

Question

Quizplus · Accepted Answer

FIFO (First In, First Out) charges the oldest costs against revenues on the income statement, not the newest costs. This means it matches the cost of the earliest purchased or manufactured units with current revenues, not the cost of replacing the units with current costs.

FIFO Charges the Newest Costs Against Revenues on the Income