Which stock valuation method uses the most recently acquired stock first?

Which stock valuation method uses the most recently acquired stock first?

• A. Last in, first out (LIFO)
• B. First in, first out (FIFO)
• C. Weighted average cost
• D. Specific identification

Answer: (A)

Last In, First Out (LIFO) is the stock valuation method that uses the most recently acquired stock first. This means when you price cost of goods sold, you allocate the cost of the latest purchases to COGS, while the older costs remain in ending inventory. This directly matches the idea of selling the newest stock first. By comparison, FIFO uses the oldest costs for COGS, weighted average blends all costs into a single average, and specific identification tracks the exact items and their costs. So the method that best fits the description of selling the most recently acquired stock first is LIFO.

Last In, First Out (LIFO) is the stock valuation method that uses the most recently acquired stock first. This means when you price cost of goods sold, you allocate the cost of the latest purchases to COGS, while the older costs remain in ending inventory. This directly matches the idea of selling the newest stock first. By comparison, FIFO uses the oldest costs for COGS, weighted average blends all costs into a single average, and specific identification tracks the exact items and their costs. So the method that best fits the description of selling the most recently acquired stock first is LIFO.