Which of the four inventory approaches transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs?
A)LIFO
B)FIFO
C)Average cost
D)Specific identification

Question

Quizplus · Accepted Answer

LIFO (last in, first out) assumes that the most recently acquired items are sold first, so the cost of goods sold reflects those recent costs. The remaining items in inventory are assumed to be from the oldest acquisition costs. This approach is useful when prices are increasing because it reduces taxable income by matching recent, higher-priced purchases with revenue.

Which of the Four Inventory Approaches Transfers the Most Recent