Which inventory method provides the highest quality information for the balance sheet?
A)LIFO.
B)FIFO.
C)Weighted average.
D)Retail inventory.

Question

Quizplus · Accepted Answer

FIFO (First-in, First-out) provides the highest quality information for the balance sheet because it assumes that the first items purchased are also the first items sold. This accurately reflects the current value of inventory on the balance sheet, as it represents the most recent purchases. LIFO (Last-in, First-out) assumes that the last items purchased are the first items sold, which can result in an understatement of the value of inventory on the balance sheet. Weighted average and retail inventory can be useful for other purposes, but they do not provide as accurate information for the balance sheet as FIFO.

Which Inventory Method Provides the Highest Quality Information for the Balance