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Question

The valuation of closing inventory under FIFO method tends to be nearer to _____________.

A
current market price
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B
standard cost
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C
oldest purchases
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D
next purchase cost
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Solution

The correct option is C current market price
In case of First In First Out method of Inventory, material is issued to the production on first in first out basis. It means the material received first has to be issued first and so on.
Under FIFO method, the latest prcourred stock will be in closing stock with the latest price which is tends to be nearer to the current market price.

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