FIFO Means That the Costs of the Oldest Items in Inventory

question 119

Multiple Choice

FIFO means that the costs of the oldest items in inventory are ________.

• A)the costs that attach to ending inventory at the end of the period
• B)the costs that attach to the inventory sold during the period
• C)reduced to the lower of cost or market value during the period
• D)expensed when purchased

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that aim to standardize financial reporting around the world.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle if longer.

Current Liabilities

Obligations that a company is required to pay within the next year or within its operating cycle if longer.

Summary of Significant Accounting Policies

A section in an entity's financial statements that describes the significant accounting policies used in the preparation of those statements.