Which inventory method sells goods acquired at the beginning of the period first?

The method that sells goods acquired at the beginning of the period first is FIFO, which stands for "First In, First Out." This approach assumes that the oldest inventory items are sold before the newer ones. As a result, it effectively matches the cost of older inventory with current sales revenue, allowing businesses to manage their inventories more clearly and maintain a consistent flow of older stock.

Using the FIFO method can be particularly beneficial during periods of inflation because it means that the costs of the older items, which are generally lower, are recorded as the cost of goods sold. This can lead to higher reported profits as the expenses recognized are based on the older, cheaper inventory, while more recent sales may be at higher prices. Furthermore, this method aligns well with certain industries where selling older products first is common practice to minimize obsolescence.

In contrast, LIFO (Last In, First Out) assumes that the latest inventory purchases are sold first, which often results in higher cost of goods sold during times of rising prices, potentially lower profits reported. The average cost method calculates a weighted average of all inventory costs for the entire period, while specific identification tracks each item individually, making FIFO the clear choice for the scenario described in the question.