alleryIn FIFO method, closing inventory consists of:
ALatest purchased consignments
BOldest purchased consignments
CAn average of all purchases
DEstimated next quarter cost
Answer & Solution
Correct answer: A. Latest purchased consignments
1. FIFO assumes the items purchased earliest are issued/sold first.
2. Consequently the items remaining at period end are those purchased most recently.
3. Closing inventory is therefore valued at the cost of the latest consignments.
_Source: ICAI BoS Foundation Paper 1, Ch 4 "Inventories", §5.1 (ii)_
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