The LIFO method assigns the most recent inventory cost to cost of goods sold.

Question

Quizplus · Accepted Answer

This statement accurately describes the LIFO (last in, first out) inventory cost flow assumption. Under LIFO, the cost of goods sold is calculated using the cost of the most recent inventory purchases or production, which are considered to be the first items sold. This results in a higher cost of goods sold and lower net income, especially during periods of inflation.

The LIFO Method Assigns the Most Recent Inventory Cost to Cost