- CFA Exams
- CFA Level I Exam
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 25. Inventories
- Subject 2. Inventory Valuation Methods
CFA Practice Question
Under which cost flow assumption is the ending inventory composed of the most recently purchased merchandise?
A. FIFO
B. LIFO
C. Average Cost
Explanation: Under the FIFO (First-In, First-Out) cost flow assumption, the inventory on hand is considered to be composed of the most recent items purchased.
User Contributed Comments 3
| User | Comment |
|---|---|
| vina | first in first out so most recent item goes out first... |
| johnsk | vina: it's the opposite! |
| zax4 | The ? is talking about the ending inventory not how the inventory is sold. |