Which of the following is not true regarding the use of the first-in first-out (FIFO)method of valuing inventory?
A)Cost of sales is assumed to consist of the weighted average of the goods acquired
B)The most recent goods acquired are assumed to be included in closing inventory
C)The earliest goods acquired are assumed to comprise closing inventory
D)Cost of sales is assumed to consist of the most recent goods acquired

Question

Quizplus · Accepted Answer

The first-in first-out (FIFO) method assumes that the earliest goods acquired are included in cost of sales, while the most recent goods acquired are included in closing inventory. Therefore, choices B and D accurately describe the FIFO method. Choice C is also untrue, as it states that the earliest goods acquired are assumed to comprise closing inventory, which is the opposite of the FIFO assumption. However, choice A is not true because if the FIFO method is used, cost of sales is not assumed to consist of the weighted average of the goods acquired. This is the cost flow assumption used in the weighted average method.

Which of the Following Is Not True Regarding the Use