On January 1,2014,a company had 100 units of inventory.A company acquired 100 units of inventory on January 31,2014 and 100 units on December 1,2014.The company sold 100 units on December 31,2014,which was the company's only sale.Under FIFO,the cost of goods sold would come from ________.
A) the purchase cost of beginning inventory
B) the purchase cost on January 31, 2014
C) the purchase cost on December 1, 2014
D) an average of the cost over the two purchase dates

Question

Quizplus · Accepted Answer

Under the First-In, First-Out (FIFO) method, the cost of goods sold is based on the cost of the oldest inventory. Therefore, it would come from the purchase cost of the beginning inventory, which is the oldest in this scenario.

On January 1,2014,a Company Had 100 Units of Inventory