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      Question

      The method of inventory valuation that assumes that the

      most recently purchased items are the first to be sold is called:
      A FIFO (First-In, First-Out) Correct Answer Incorrect Answer
      B LIFO (Last-In, First-Out) Correct Answer Incorrect Answer
      C Weighted Average Cost Correct Answer Incorrect Answer
      D Specific Identification Correct Answer Incorrect Answer

      Solution

      LIFO is an inventory valuation method which assumes that the goods most recently added to inventory (last in) are the first to be sold (first out). (Note: LIFO is prohibited under International Financial Reporting Standards (IFRS) and is also not permitted by the Indian accounting standard on inventories, Ind AS 2, but is a conceptual method often tested).

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