Under LIFO, ending inventory consists of which prices?

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Multiple Choice

Under LIFO, ending inventory consists of which prices?

Explanation:
Under LIFO, the last units purchased are treated as sold first. That leaves the oldest purchases still on hand at period end, so the ending inventory is valued at older prices. For example, if you bought some units at $8, then later at $10 and $12, and you sold enough that the most recent costs are used up, the remaining inventory will consist of the older $8 (and possibly $10) costs, not the newest $12 costs. Thus ending inventory reflects older prices, not the most recent or current prices.

Under LIFO, the last units purchased are treated as sold first. That leaves the oldest purchases still on hand at period end, so the ending inventory is valued at older prices. For example, if you bought some units at $8, then later at $10 and $12, and you sold enough that the most recent costs are used up, the remaining inventory will consist of the older $8 (and possibly $10) costs, not the newest $12 costs. Thus ending inventory reflects older prices, not the most recent or current prices.

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