Question

The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is:____________
A) FIFO.
B) Weighted average.
C) LIFO.
D) Specific identification.
E) Lower of cost or market.

Answer 1

Answer: The inventory valuation method that has the advantages of assigning an amount to inventory on the balance sheet that approximates its current cost, and also mimics the actual flow of goods for most businesses is "A) FIFO."

Explanation: This happens because the FIFO method (First in, First out) as the name implies, when registering an inventory output, takes into account the first units introduced to the inventory, remaining as the last units acquired, which are those that best reflect the current cost.