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JAMB Principles of Accounts 2008 Question 22

Question 22

Stock Valuation

In a period of inflation, which of the following methods normally gives a closing stock value very close to the market value?

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

Answer: A (FIFO)

Explanation

FIFO leaves the most recent purchases in stock, and their prices are closest to current market prices.