Final answer:
The Last-in, first-out (LIFO) method assigns the cost of goods sold to the most recent purchases made during the period. This approach can result in higher COGS reported when prices rise. Other methods include FIFO, weighted-average, and specific identification, each with different assumptions on cost allocation.
Step-by-step explanation:
The inventory costing method that assigns the cost of goods sold (COGS) to the most recent purchases during the period is the Last-in, first-out (LIFO) method. Under LIFO, the latest inventory costs are charged to cost of goods sold first. This can lead to higher costs reported on the income statement when prices are rising, as the most recently purchased inventory items, which are usually more expensive due to inflation, are considered sold first.
Conversely, other methods like First-in, first-out (FIFO) assume that the oldest inventory costs are allocated to COGS. The Weighted-average method calculates COGS based on the average cost of all goods available for sale during the period. Meanwhile, the Specific identification method tracks each item of inventory individually, assigning its specific cost to COGS, which is more suitable for unique and expensive items.