Which inventory method is better described as having a balance sheet focus and why is it considered as such?

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method is better described as having a balance sheet focus because it assumes that the oldest inventory items are sold first, which results in the most recent inventory items remaining on the balance sheet. This method better approximates the value of ending inventory as it assumes that the cost of goods sold is based on the most recent inventory items, thus leaving the older inventory items on the balance sheet. This results in a more accurate approximation of the value of inventory as it reflects the most recent cost of inventory items.

Which Inventory Method Is Better Described as Having a Balance