Asked by Maria Alanis on Jun 03, 2024
Verified
FIFO charges the newest costs against revenues on the income statement thus matching the current cost of replacing the units with current revenues.
FIFO
FIFO, or First-In, First-Out, is an inventory valuation method where goods first bought are the first to be sold, affecting cost of goods sold and inventory valuation on the balance sheet.
Revenues
The total amount of income generated by the sale of goods or services related to a company's primary operations.
- Comprehend the operation and impact of diverse inventory valuation methods, notably FIFO and LIFO.
Verified Answer
IL
Isaac LoyalJun 08, 2024
Final Answer :
False
Explanation :
FIFO (First In, First Out) charges the oldest costs against revenues on the income statement, not the newest costs. This means it matches the cost of the earliest purchased or manufactured units with current revenues, not the cost of replacing the units with current costs.
Learning Objectives
- Comprehend the operation and impact of diverse inventory valuation methods, notably FIFO and LIFO.
Related questions
By Charging the Oldest Costs to the Income Statement,FIFO Automatically ...
An Advantage of the Specific Invoice Method Is That ...
A Beginning Inventory and Purchases of Desks Follow: the ...
Calculate the Ending Inventory Under Each of the Following Methods ...
The Inventory Method Where Unit Cost Is Found by Dividing ...