When a company uses FIFO,the Cost of goods sold correlates to the most recently purchased goods,and the ending inventory correlates to the oldest goods in stock.

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When a company uses FIFO (first in, first out) method, the cost of goods sold correlates to the oldest goods in stock and the ending inventory correlates to the most recently purchased goods. This is because the assumption is that the goods that were purchased first are also the ones that will be sold first, and thus the cost of those goods is transferred to the cost of goods sold.

When a Company Uses FIFO,the Cost of Goods Sold Correlates