Generally,which inventory costing method approximates most closely the current cost for each of the following?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Generally,which inventory costing method approximates most closely the current cost for each of the following? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The First-In, First-Out (FIFO) method assumes that the first units purchased are the first ones sold or issued. Therefore, the cost of the most recent units purchased or produced is not matched with current sales revenue. As a result, in periods of inflation, FIFO reports the highest ending inventory value, the highest gross profit, and the highest net income. Since this method most closely approximates current costs, option A is the best choice.

Generally,which Inventory Costing Method Approximates Most Closely the Current Cost