Accountants often call FIFO the balance sheet approach because the amount it reports for ending inventory better approximates the current cost of inventory.

Question

Quizplus · Accepted Answer

FIFO assumes that the first units of inventory purchased are the first ones sold or used, which means that the ending inventory balance reflects the most recent or current cost of inventory. This is why it is often referred to as the balance sheet approach as it reports a more accurate representation of the value of inventory on the balance sheet.

Accountants Often Call FIFO the Balance Sheet Approach Because the Amount