The inventory costing method that reports the most current prices in ending inventory is
A) FIFO
B) Specific identification
C) LIFO
D) Average cost

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method assumes that the oldest inventory is sold first and the most recent inventory is left in ending inventory. Therefore, FIFO reports the most current prices in ending inventory, making it the best choice to answer this question. Specific identification method would also report the most current prices in ending inventory but it is not a commonly used method. LIFO (Last-In, First-Out) and average cost methods do not necessarily report the most current prices in ending inventory.

The Inventory Costing Method That Reports the Most Current Prices