Question

The LIFO inventory method assumes that the latest units purchased for inventory will also be the ______ units left in the ending balance of inventory.

1) First
2) Middle
3) Last
4) Random

Answer 1

The LIFO inventory method assumes the latest units purchased are the last units left in inventory, meaning the correct response is 'Last'.

Step-by-step explanation:

The LIFO inventory method assumes that the latest units purchased for inventory will also be the last units left in the ending balance of inventory. Therefore, the correct answer is 3) Last. The LIFO method, which stands for Last-In, First-Out, is one of the several approaches used to manage inventory and calculate the cost of goods sold for financial reporting and tax purposes. Under LIFO, when a company sells a product, it uses the cost of the most recently produced or purchased items first, leaving the older and typically cheaper items in inventory.