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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 Moving average method Correct Answer Incorrect Answer
      E Simple average method Correct Answer Incorrect Answer

      Solution

      The inventory costing formula that calculates the value of closing inventory by assuming that the inventory most recently purchased is still in stock is the First-In-First-Out (FIFO) method. Under this method, the oldest inventory is assumed to be sold first, and the most recently purchased inventory is assumed to be still in stock.

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