Which of the following statements is correct regarding the use of the first-in first-out (FIFO)method of valuing inventory?
A) Cost of sales for the period is calculated using weighted average cost of the goods acquired.
B) Closing inventory consists of goods purchased earlier in the period.
C) Closing inventory consists of the most recently purchased goods.
D) Cost of sales for the period is calculated using the most recent inventory cost per item.

Question

Quizplus · Accepted Answer

The FIFO (First-In, First-Out) method assumes that the first items purchased are the first ones to be sold, and the most recently purchased items remain in inventory. Therefore, closing inventory consists of the most recently purchased goods.

Which of the Following Statements Is Correct Regarding the Use