PRC-1 · Chapter 7 · Question 30 of 100
Which inventory valuation method assumes that the items of inventory that were purchased or produced first are sold first?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) FIFO
Explanation
FIFO stands for First-In, First-Out, meaning the oldest costs are assigned to Cost of Sales first, leaving the most recent costs in ending inventory.
More IAS 2: Inventories MCQs
- Q32Under a periodic inventory system, how is the 'Cost of Sales' figure derived at the end of the accounting period?
- Q33Which of the following scenarios REQUIRES the use of the 'Specific Identification' cost formula under IAS 2?
- Q34If the circumstances that previously caused inventory to be written down below cost no longer exist, and the NRV has increased, what is…
- Q35How is 'Carriage Outwards' (freight out) treated in the financial statements?
- Q36A company values its inventory on a FIFO basis and adopts a perpetual system. On Jan 1: 500 units @ Rs. 60. Jan 11: Purchased 100 units @…
