Question

When LIFO is used with the periodic inventory system, cost of goods sold is assigned costs from the most recent purchases at the point of each sale, rather than from the most recent purchases for the period.True/False

Answer 1

Answer:

False

Explanation:

LIFO System is an Inventory management system the Sales the Recent Inventory first followed by Inventory Acquired in past.

This results in Sales Carrying Prices of the Most Recent Purchases and Closing Inventory Carrying Old Prices.

The method that assigns costs from most recent purchases at the point of each sale is Weighted Average Cost Method.

Answer 2

Answer: FALSE

Explanation: The LIFO( Last-in First-out) principle in a periodic inventory system as the name implies, means that prices of goods sold is assigned cost starting from the most recent purchases for that period. In simple terms, if a good is to be sold, such good is sold at the price of the most recent purchase in the inventory until the unit of goods in that inventory is exhausted, then goods sold after that are assigned the price of the next most recent purchase in the inventory until the unit of goods in that inventory is also exhausted and the trend goes thus.