The inventory costing system that charges inventory to cost of goods sold in chronological order of its purchase is referred to as:
A)FIFO
B)LIFO
C)specific identification
D)periodic identification

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method charges inventory to cost of goods sold in the order that it was purchased, meaning that the earliest goods purchased are the first to be recognized as costs of sales. This method is commonly used as it is simple and logical, and many companies prefer to use it because it results in the most current cost of goods being recorded as inventory. Therefore, it is the best choice among the options provided.

The Inventory Costing System That Charges Inventory to Cost of Goods