Question

which inventory technique assumes that the most recently purchased inventory is sold first?

lifo

abc

average cost

fifo

Explanation:

To determine the correct inventory technique, we analyze each option:

• LIFO (Last - In, First - Out): By definition, LIFO assumes that the most recently purchased (last - in) inventory is sold first.
• ABC: The ABC inventory technique is used for classifying inventory based on its value (importance), not on the order of sale of recently purchased items.
• Average cost: This technique calculates the cost of goods sold and ending inventory by using the average cost of all inventory available, and it has nothing to do with the order of selling recently purchased inventory.
• FIFO (First - In, First - Out): FIFO assumes that the oldest (first - in) inventory is sold first, which is the opposite of what the question is asking.

Answer:

A. LIFO