Under the FIFO method, the flow of costs through the accounting records will:
A)be nearly the opposite of the physical flow of goods through the business.
B)closely match the physical flow of goods through the business.
C)exactly match the physical flow of goods through the business.
D)have no relationship to the physical flow of goods through the business.

Question

Quizplus · Accepted Answer

The FIFO (First-In, First-Out) method assumes that the first inventory items purchased are the first to be sold. Therefore, the costs of the oldest inventory items are assigned to the units sold first, closely matching the physical flow of goods through the business. However, the actual physical flow may not exactly match the accounting records due to factors such as spoilage and waste.

Under the FIFO Method, the Flow of Costs Through the Accounting