Multiple Choice
The letters FIFO refer to which of the following inventory costing methods?
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5. Inventory
Periodic Inventory - FIFO, LIFO, and Average Cost
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According to the FIFO (First-In, First-Out) inventory method, the carton stored in front should have which use-by date?
A
The earliest use-by date
B
The latest use-by date
C
A random use-by date
D
The median use-by date
Verified step by step guidance1
Understand the FIFO (First-In, First-Out) inventory method: FIFO assumes that the oldest inventory items (those first purchased or produced) are the first to be used or sold.
Identify the key principle of FIFO: The inventory stored in front represents the oldest stock, which means it should have the earliest use-by date.
Relate the FIFO principle to the use-by date: Since FIFO prioritizes the oldest inventory, the carton stored in front should have the earliest use-by date to ensure proper rotation and minimize waste.
Eliminate incorrect options: The latest use-by date, a random use-by date, and the median use-by date do not align with FIFO principles, as FIFO focuses on the chronological order of inventory usage.
Conclude the correct answer: Based on FIFO, the carton stored in front should have the earliest use-by date to maintain inventory accuracy and efficiency.
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