Which of the following is true regarding the perpetual LIFO inventory method? a. Costs are included in the cost of merchandise sold in the order in which units were purchased. b. All of these choices are correct. c. The cost of the units sold is the cost of the most recent purchases. d. Unit costs for each item are averaged each time a purchase is made.

Question

Business

Ainsley Chandler

18 April, 13:39

Which of the following is true regarding the perpetual LIFO inventory method? a. Costs are included in the cost of merchandise sold in the order in which units were purchased. b. All of these choices are correct. c. The cost of the units sold is the cost of the most recent purchases. d. Unit costs for each item are averaged each time a purchase is made.

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Answers (1)

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Maeve Roberts · Answer 1

c. The cost of the units sold is the cost of the most recent purchases

Explanation:

The LIFO inventory system means last in, first out. It is a system of inventory where the cost of most recently purchased inventory is used as the cost of goods sold.

The FIFO means first in, first out. It means that the cost of earlier purchased inventory is used as the cost of goods sold.

Average cost method is an inventory method where the average cost of inventory is used as cost of goods sold.