Which of these is the method of pricing issues, stock is valued at historical price? A. FIFO B. LIFO C. Simple Average D. Weighted Average
Question
Which of these is the method of pricing issues, stock is valued at historical price? A. FIFO B. LIFO C. Simple Average D. Weighted Average
Solution
The method of pricing issues where stock is valued at historical price is A. FIFO (First In, First Out). This method assumes that the first goods purchased or produced are the first ones to be sold. Therefore, the cost of goods sold is based on the cost of materials bought earliest in the period, while the cost of inventory is based on the cost of materials bought later in the year. This method is most appropriate during periods of rising prices, as it results in lower cost of goods sold and higher net income.
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