Using the FIFO method,the earliest purchases of inventory are assumed to be contained
A)on the balance sheet as part of ending inventory.
B)on the income statement as part of cost of goods sold.
C)equally split between the income statement and the balance sheet.
D)Impossible to determine from the given data
E)The earliest purchases of inventory under FIFO are not shown on any financial statement.

Question

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) method, the earliest purchases of inventory are assumed to be the first ones sold and thus are reported on the income statement as part of the cost of goods sold.

Using the FIFO Method,the Earliest Purchases of Inventory Are Assumed