FIFO Inventory Valuation Basics Steps:

• Recall FIFO assumes oldest inventory costs are sold first, leaving newest costs in ending inventory.
• Identify correct statements: 2 (matches rising prices, COGS lower than ending inventory) and 3 (ending inventory reflects recent costs).
• Eliminate incorrect pairs: A includes wrong 1, B includes wrong 1 and 4, D includes wrong 4.
• Confirm C pairs the two accurate FIFO traits.

Why C is correct:

• FIFO, by definition, assigns earliest costs to COGS and latest to ending inventory, aligning with statements 2 and 3 in inflationary periods.

Why the others are wrong:

• A: Statement 1 incorrectly describes LIFO, not FIFO.
• B: Includes incorrect statements 1 (LIFO trait) and 4 (doesn't apply to FIFO).
• D: Statement 4 misstates FIFO's balance sheet impact.

Not enough information on exact statements 1-4, but based on standard FIFO principles, C fits.

Final answer: C