Of the three cost-flow assumptions, FIFO results in balance sheet figures that are closest to current cost because the latest purchases dominate the ending inventory amounts.

Question

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FIFO (First-In, First-Out) assumes that the first items bought are the first ones sold, resulting in the latest or most recent purchases remaining in the inventory. This means that ending inventory amounts reflect the most current cost, making the balance sheet figures closest to the current cost.

Of the Three Cost-Flow Assumptions, FIFO Results in Balance Sheet