The correct answer is: C. Raw material to be issued
FIFO and LIFO are valuation methods of raw material to be issued.
- FIFO stands for First-In, First-Out. This method assumes that the first items that are purchased are also the first items that are sold. This means that the cost of goods sold is based on the cost of the oldest inventory items.
- LIFO stands for Last-In, First-Out. This method assumes that the last items that are purchased are also the first items that are sold. This means that the cost of goods sold is based on the cost of the newest inventory items.
Both FIFO and LIFO are acceptable methods of accounting for inventory. However, they can result in different financial statements. For example, FIFO will typically result in a higher cost of goods sold and a lower net income than LIFO.
The choice of inventory valuation method is a significant accounting decision. It should be made based on the needs of the business and the requirements of the accounting standards.
A. Fixed assets are assets that are expected to be used for more than one year. They are not included in the cost of goods sold.
B. Investments are assets that are held for the purpose of generating income or capital appreciation. They are not included in the cost of goods sold.