The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is:
A) FIFO.
B) Weighted average.
C) LIFO.
D) Specific identification.
E) All of these.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assigns an amount to inventory on the balance sheet that approximates its current cost because it assumes that the oldest items are sold first, leaving the most recently purchased or produced items in inventory. This method often mimics the actual flow of goods for many businesses, especially those dealing with perishable goods, making it advantageous for reflecting both the cost of goods sold and the value of ending inventory.

The Inventory Valuation Method That Has the Advantages of Assigning