An advantage of FIFO method of stock valuation is that?

A. it serves-as a control during inflation
B. it is calculated at the end of the year
C. it is progressive in nature
D. its flow of cost is in sequence with the flow of stock.

Correct Answer:

Option D – its flow of cost is in sequence with the flow of stock.

Explanation

The first in first out(FIFO) method of stock valuation, major advantage 1 it is very easy to apply 2 no manipulation of income is possible 3 the balance sheet amount for inventory is likely to approximate the current market value

its flow of cost is in sequence with the flow of stock: since the first stock will be considered for sale before other stock. the cost is always in sequence with the flow of stock because it correspondence with the normal physical flow of goods