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    Question

    Which inventory costing formula calculates value of

    closing inventory considering that inventory most recently purchased has not been sold?
    A FIFO Correct Answer Incorrect Answer
    B LIFO Correct Answer Incorrect Answer
    C Weighted average cost Correct Answer Incorrect Answer
    D HIFO Correct Answer Incorrect Answer

    Solution

    FIFO (First In First Out) assumes that older inventory is sold first. Thus, the closing inventory consists of the most recently purchased goods, which have not been sold. LIFO does the opposite, and weighted average blends cost.

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