What Is the Difference Between FIFO (First In, First Out)

question 83

Multiple Choice

What is the difference between FIFO (first in, first out) and LIFO (last in, first out) accounting?

• A) FIFO refers to the practice of firms, when making sales, assuming that the inventory that came in first (at a higher price) is being sold first.
• B) During a period of rising prices, LIFO implies that a firm is selling the higher cost, newer inventory first, leaving the lower cost, older inventory on the balance sheet.
• C) During a period of falling prices, LIFO implies that a firm is selling the higher cost, newer inventory first, leaving the lower cost, older inventory on the balance sheet.
• D) LIFO refers to the practice of firms, when making sales, assuming that the inventory that came in last is being sold first (at a higher price).

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms, policies, or societal expectations.

Behavior

Everything we do that can be directly observed.

Social Facilitation Effect

The tendency for people to perform differently when in the presence of others, usually better on well-practiced tasks and worse on new tasks.

Genetic Predisposition

The inherent susceptibility to certain conditions or characteristics based on one's genetic makeup.