Which of the following does NOT correctly describe the FIFO cost formula?
A) This method assumes that the oldest inventory costs are the first costs recorded for cost of goods sold.
B) This method assumes that most current inventory costs are the first costs recorded for cost of goods sold.
C) This method approximates the physical flow of most types of goods.
D) This method is permitted under both ASPE and IFRS.

Question

Quizplus · Accepted Answer

The FIFO (first-in, first-out) cost formula assumes that the oldest inventory costs are the first costs recorded for cost of goods sold, not the most current inventory costs. Choices A, C, and D correctly describe the FIFO cost formula.

Which of the Following Does NOT Correctly Describe the FIFO