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

Question

Quizplus · Accepted Answer

This is because LIFO (Last In, First Out) assumes that the most recently purchased goods are sold first, therefore the cost of goods sold will reflect those recent purchases. On the other hand, the ending inventory is assumed to consist of the oldest goods in stock, which have not yet been sold.

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