Which of the Following Statements Regarding FIFO Is Incorrect

question 54

Multiple Choice

Which of the following statements regarding FIFO is incorrect?

• A) Ending inventory is based on the costs of the most recent purchases.
• B) FIFO is consistent with the physical movement of inventory for most companies.
• C) The first units to come in are assumed to be the first units sold.
• D) FIFO is a specific identification costing method because companies sell their oldest inventory first.

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Definitions:

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies and to reflect this in the profit and loss statement proportionally to their ownership level.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not fully control the company, typically 20%-50% ownership.

Proportionate Share

An individual's or entity's part or share of something in relation to the whole, usually expressed as a percentage.