35 Which of the following statements regarding FIFO is incor

35) Which of the following statements regarding FIFO is incorrect? 35) A) FIFO is consistent with the physical movement of inventory for most companies. B) Ending inventory is based on the costs of the most recent purchases. C) The first units to come in are assumed to be the first units sold. D) FIFO is a specific identification costing method because companies sell their oldest inventory first.

Solution

Answer is A. FIFO is consistent with the physical movement of inventory for most companies.

Explanation: FIFO implies the first unit entered in the store room has been issued first irrespective of which specific unit is issued.