Question

When using the periodic LIFO inventory cost method, which of the following statements is correct? a.The cost of merchandise on hand is made up of the most recent purchases. b.The physical count determines the inventory on hand. c.The cost of merchandise sold is made up of the earlier purchases. d.None of these choices are correct.

Answer 1

Answer:

correct option is b. The physical count determines the inventory on hand

Explanation:

LIFO is  Last In, First Out

so in LIFO cost flow is assumption

and the last costs are the first ones to leave inventory

become the cost of goods sold on the income statement.

and first costs will be reported as inventory on the balance sheet

and under LIFO periodic we are wait until the entire year is over before assigning cost

so we can say The physical count determines the inventory on hand

and Cost is the total resources given up to acquire inventory and move it