FIFO uses the ________ costs to measure the cost of goods sold.
A)latest
B)earliest
C)average
D)weighted-average

Question

Quizplus · Accepted Answer

FIFO stands for "First In, First Out" and assumes that the first goods purchased will be the first goods sold. Therefore, FIFO uses the earliest costs to measure the cost of goods sold. This method is suitable when inventory costs are generally increasing, as it results in a lower cost of goods sold and higher net income in periods of inflation.

FIFO Uses the ________ Costs to Measure the Cost of Goods