Which statement is correct about cost allocation methods under GAAP?
A)FIFO method expenses the oldest costs first.
B)FIFO method has the oldest costs on the balance sheet.
C)FIFO method has the most recent costs in the income statement.
D)FIFO is not an acceptable cost allocation method.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method expenses the oldest costs first, meaning the costs of the earliest goods purchased or manufactured are the first to be recognized in determining cost of goods sold, while the most recent costs remain in inventory on the balance sheet.

Which Statement Is Correct About Cost Allocation Methods Under GAAP