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Under which method would the ending inventory be valued at the most recent purch

Practice Questions

Q1
Under which method would the ending inventory be valued at the most recent purchase prices?
  1. FIFO
  2. LIFO
  3. Weighted Average
  4. Specific Identification

Questions & Step-by-Step Solutions

Under which method would the ending inventory be valued at the most recent purchase prices?
  • Step 1: Understand that inventory methods are used to value the goods a company has at the end of a period.
  • Step 2: Learn about the two common inventory methods: LIFO (Last In, First Out) and FIFO (First In, First Out).
  • Step 3: Know that under LIFO, the most recent purchases are sold first, meaning the ending inventory consists of older costs.
  • Step 4: Understand that under FIFO, the oldest inventory is sold first, so the ending inventory is made up of the most recent purchases.
  • Step 5: Conclude that FIFO is the method that values the ending inventory at the most recent purchase prices.
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