If a company values its inventory using the FIFO method, when the company makes a sale in a rising price environment, it assumes the sale is from the newest, highest-cost inventory.

Name: If a company values its inventory using the FIFO method, when the company makes a sale in a rising price environment, it assumes the sale is from the newest, highest-cost inventory.
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Question

Quizplus · Accepted Answer

In a FIFO (First-In, First-Out) system, the company assumes that the oldest inventory (first purchased) is sold first, not the newest.

If a Company Values Its Inventory Using the FIFO Method