Which of the Following Statements Regarding Inventories Is Correct

question 56

Multiple Choice

Which of the following statements regarding inventories is correct?

• A)FIFO assumes that the costs of the earliest goods acquired are the last to be sold.
• B)It is generally good business management to sell the most recently acquired goods first.
• C)Under FIFO, the ending inventory is based on the latest units purchased.
• D)FIFO seldom coincides with the actual physical flow of inventory.

---

Definitions:

The Wealth of Nations

A seminal book by Adam Smith, which discusses economics, the importance of free markets, division of labor, and productivity.

Labor

The physical and mental effort used in the production of goods and services.

Good

A material item or service that can be bought, sold, or traded, providing utility or satisfaction to the buyer.

Circumstances

A fact or condition connected with or relevant to an event or action, often influencing it or determining the outcomes.