Question

Question text

The inventory costing method that reports the earliest costs in ending inventory is

Select one:

a.

FIFO

b.

specific identification  

c.

weighted average

d.

LIFO

Answer 1

The correct answer is d. LIFO

Note:

The LIFO method reports the items purchased last to be sold first during any accounting period. Hence this method, reports the earliest costs in ending inventory. This is because as per this method the earliest inventory purchased is0 left at the end of the period and hence is reported in the ending inventory.

On the other hand, the FIFO method reports the inventory purchased first to be sold first. Hence this method reports the  latest costs in ending inventory.

The weighted average method is calculated as the ratio of value of goods available for sale and the units of inventory that is available for sale.

The specific identification method represents the costs individually tagged against its purchase price and selling price.