If FIFO is used, ending inventory equals?

If FIFO is used, ending inventory equals?

• A. Oldest items
• B. Middle items
• C. Newest items
• D. All items

Answer: (C)

Under FIFO, costs flow from oldest to newest, so ending inventory consists of the most recently acquired items. Since the oldest stock is depleted first for cost of goods sold, the items left on hand at period end are the ones purchased most recently. For example, with 100 units bought at $5 and 100 at $6, selling 120 units uses all $5 stock plus 20 of the $6 stock, leaving 80 units from the $6 batch. Those are the newest items remaining, illustrating that ending inventory reflects the newest purchases.

Under FIFO, costs flow from oldest to newest, so ending inventory consists of the most recently acquired items. Since the oldest stock is depleted first for cost of goods sold, the items left on hand at period end are the ones purchased most recently. For example, with 100 units bought at $5 and 100 at $6, selling 120 units uses all $5 stock plus 20 of the $6 stock, leaving 80 units from the $6 batch. Those are the newest items remaining, illustrating that ending inventory reflects the newest purchases.