Question

A method of allocating merchandise cost that assigns the most recent purchased costs to the ending inventory shown on the balance sheet is called the
a. last-in, first-out method.
b. first-in, first-out method.
c. specific identification method.
d. weighted-average method.

Answer 1

The answer is B. First in, first out method

Or commonly known in accounting as the FIFO method, is inventory valuation method where the first goods purchased by company is also the first goods sold.

By doing that, this will make the last goods purchased ( the most recent purchased) by the company became company ending inventory.