Financial analysts recognize that the deficiency of the FIFO cost flow assumption is the failure to
A)match current costs with current revenues.
B)match current costs with oldest revenues.
C)match oldest costs with current revenues.
D)match oldest costs with oldest revenues.

Question

Quizplus · Accepted Answer

The FIFO cost flow assumption matches oldest costs with current revenues, not current costs with oldest revenues. Therefore, it does not accurately reflect the current costs of inventory sold, which can impact the accuracy of financial statements and decision-making.

Financial Analysts Recognize That the Deficiency of the FIFO Cost