Which of the following statements regarding inventories is correct?
A)FIFO assumes that the costs of the earliest goods acquired are the last to be sold.
B)It is generally good business management to sell the most recently acquired goods first.
C)Under FIFO, the ending inventory is based on the latest units purchased.
D)FIFO seldom coincides with the actual physical flow of inventory.

Question

Quizplus · Accepted Answer

Under FIFO (First In, First Out), the ending inventory is based on the costs of the latest units purchased, as it assumes that the earliest goods purchased are the first to be sold.

Which of the Following Statements Regarding Inventories Is Correct