Cost flow is in the order in which costs were incurred when using
A) average cost
B) last-in, first-out
C) first-in, first-out
D) weighted average

Question

Quizplus · Accepted Answer

First-in, first-out (FIFO) assumes that the first items purchased or produced are the first ones sold, resulting in a cost flow that follows the chronological order of acquisition. This method is commonly used in industries where the products are perishable or frequently updated, and it allows for a more accurate calculation of inventory and cost of goods sold.

Cost Flow Is in the Order in Which Costs Were