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For one product over a period, FIFO produced the same cost of merchandise sold and ending inventory whether the perpetual or periodic system was used. What does this demonstrate about FIFO?
AFIFO gives identical results under perpetual and periodic systems
BFIFO always reports a higher cost of sales than LIFO
CFIFO requires a physical count before every sale
DFIFO results change with each purchase made
Answer & Solution
Correct answer: A. FIFO gives identical results under perpetual and periodic systems
1. Under both systems FIFO assigns the earliest costs to the units sold.
2. Because the oldest costs are used first either way, the timing of counting does not change the outcome.
3. The text confirms FIFO results are the same under periodic and perpetual systems.
4. Rule out option B: under rising costs FIFO reports a lower cost of sales than LIFO.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.2 "Periodic Inventory System", p.122_
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