Question

The first cost to be allocated to cost of goods sold is the cost of the latest goods purchased, according to the assumptions of the ________ inventory method. a) FIFO (First-In, First-Out) b) LIFO (Last-In, First-Out) c) Weighted Average d) Specific Identification

Answer 1

The cost of the latest goods purchased is allocated to cost of goods sold according to the assumptions of the b) LIFO (Last-In, First-Out) inventory method. In LIFO, it is assumed that the most recently acquired (latest) inventory items are the first to be sold, which means their cost is matched against revenue in the cost of goods sold calculation.

Step-by-step explanation: