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JAMB Principles of Accounts 2006 Question 6

Question 6

Stock Valuation

A seller of vegetables and fruits should be encouraged to value his stock at the end of a period using the

  1. A.weighted average method
  2. B.simple average method
  3. C.FIFO method
  4. D.LIFO method
Show the answer and explanation

Answer: C (FIFO method)

Explanation

Perishable goods must be sold in the order they arrive, so first in, first out (FIFO) matches how the stock actually moves.