The inventory cost flow assumption that generally best matches the physical flow of inventory is:

Question

Quizplus · Accepted Answer

FIFO (First-in-First-Out) assumes that the first inventory items purchased are sold first. This generally matches the physical flow of inventory, as it is likely that the oldest items in inventory are the first to be sold. Therefore, FIFO is the best choice for matching inventory cost flow assumption with physical inventory flow.

The Inventory Cost Flow Assumption That Generally Best Matches the Physical