An inventory cost formula in which the oldest costs incurred rarely have an effect on the ending inventory valuation is
A) FIFO.
B) moving-average cost.
C) LIFO.
D) weighted average.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first items purchased or produced are the first ones sold, meaning that the oldest costs are matched with the earliest revenues, leading to a lower risk of mismatching costs and revenues. Therefore, the oldest costs have a minimal effect on the ending inventory valuation.

An Inventory Cost Formula in Which the Oldest Costs Incurred