A company that uses the first-in,first-out method of valuing cost of goods sold must sell its older inventory before selling any of its newer inventory,even though some of the newer items may be more accessible.

Question

Quizplus · Accepted Answer

The first-in, first-out (FIFO) method of valuing cost of goods sold is an accounting approach that assumes the oldest inventory items are sold first for financial reporting purposes, but it does not require a company to physically sell its oldest inventory before newer inventory.

A Company That Uses the First-In,first-Out Method of Valuing Cost