The cost flow method that often parallels the actual physical flow of merchandise is the
A) FIFO method.
B) specific identification method.
C) average-cost method.
D) gross profit method.

Question

Quizplus · Accepted Answer

The FIFO (first-in, first-out) method assumes that the first items purchased or produced are the first items sold. This often parallels the actual physical flow of merchandise, as older inventory is typically sold before newer inventory. Therefore, the FIFO method is the best choice for a cost flow method that often parallels the actual physical flow of merchandise.

The Cost Flow Method That Often Parallels the Actual Physical