Cost flow is in the order in which costs were incurred when using

a. average cost

b. last-in, first-out

c. first-in, first-out

d. weighted average

Choice (c) is correct. First-in, first-out is accepted as one of inventory costing method where the inventory bought earlier is to be sold first. The cost of goods sold is consists of inventory bought earlier or the beginning inventory with the corresponding cost. On the other hand, the ending inventory costs are from the inventory that was not sold with corresponding costs.