When using the periodic LIFO inventory cost method, which of the following statements is true? a. The physical count determines the inventory on hand. b. The cost of goods sold is made up of the earlier purchases. c. The cost of inventory on hand is made up of the most recent purchases. d. None of these choices are correct.

Question

Business

Caroline Brennan

26 September, 10:01

When using the periodic LIFO inventory cost method, which of the following statements is true? a. The physical count determines the inventory on hand. b. The cost of goods sold is made up of the earlier purchases. c. The cost of inventory on hand is made up of the most recent purchases. d. None of these choices are correct.

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Answers (1)

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Lucian Barr · Answer 1

a. The physical count determines the inventory on hand.

Explanation:

Periodic inventory system determines the cost of inventory at the end of each accounting period. It requires inventory count on each period end and the cost of inventory is valued on the basis of physical count. LIFO does not effect as physical count is used for the valuation of inventory.