Accountıng I Deneme Sınavı Sorusu #1313835
Whihc of the following is true for "First-In, First-Out (FIFO)"?
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It is an inventory costing method in which the first costs into inventory are the first costs out to cost of goods sold. Ending inventory is based on the costs of the most recent purchases. |
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It is an inventory costing method in which the last costs into inventory are the first costs out to cost of goods sold. |
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It is an inventory costing method which leaves the newest costs and purchases in ending inventory. |
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It is a method which assumes that inventories which are most recently purchased are sold first |
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It is a method in which cost of goods sold is based on the most recent purchases (new costs) |
The First-In, First-Out (FIFO) method assumes that the earliest goods purchased arethe first to besold. Under the first-in, first-out (FIFO) method, the cost of goods sold is based on the oldest purchases – that is, the first units to come in are assumed to be the first units to go out of the warehouse (sold). FIFO costing is consistent with the physical movement of inventory (for most companies). That is, under the FIFO inventory costing method, companies sell their oldest inventory first.
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