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  • Order in Which They Were Incurred

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    Rizia Feh Eustaquio
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    This document discusses different inventory costing methods including specific identification, FIFO, average cost using weighted average and moving average, and LIFO. It notes that while the ending inventory units are the same under each method, the assigned costs and cost of goods sold can differ. The overall cost of goods sold is the same regardless of method, but LIFO would generate the smallest reported net income when prices are rising.

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    inventory

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    Chapter Inventory

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    This document discusses different inventory costing methods including specific identification, FIFO, average cost using weighted average and moving average, and LIFO. It notes that while the ending inventory units are the same under each method, the assigned costs and cost of goods sold can differ. The overall cost of goods sold is the same regardless of method, but LIFO would generate the smallest reported net income when prices are rising.

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    10 views1 page

    Order in Which They Were Incurred

    Uploaded by

    Rizia Feh Eustaquio
    This document discusses different inventory costing methods including specific identification, FIFO, average cost using weighted average and moving average, and LIFO. It notes that while the ending inventory units are the same under each method, the assigned costs and cost of goods sold can differ. The overall cost of goods sold is the same regardless of method, but LIFO would generate the smallest reported net income when prices are rising.

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    © All Rights Reserved
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    Chapter Inventory

    COST FORMULA COST ASSUMPTION


    1. Specific Identification Method identifying each item sold and each item in inventory
    2. FIFO Method based on the assumption that cots should be charged against revenue in the
    order in which they were incurred
    3. Average Cost
    a) Weighted Average Method considers goods to be undistinguishable and are therefore
    valued at an average of the costs incurred
    b) Moving Average Method - requires a computation of new unit cost after each purchase and
    subsequent issues are priced at the latest average unit cost
    EI in units is the same in all 3 methods: the cost is different
    CGS and Cost of EI are different _
    COGAS same in all methods
    LIFO method would result smallest reported net income (with rising prices)

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