Which of the four inventory approaches transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs?

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Business

Oliver

23 April, 06:46

Which of the four inventory approaches transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs?

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Nathalie Best · Answer 1

Last In First Out (LIFO)

Explanation:

The cost flow assumption of the last-in, first-out (LIFO) allocates the cost of goods available for sale between the end of inventory and the cost of goods sold on the assumption that the most recent purchases (the last in) are the first ones sold (the first out).

Therefore, LIFO methods give the most recent cost of purchase.