using FIFO versus LIFO as the cost flow assumption in the accountant’s process of inventory valuation for financial statement reporting to a company’s external stakeholders. FIFO AND LIFO ANALYSIS As shown in the exhibit‚ because the price of LG TV was decreasing‚ Samuel’s Electronics would record less cost of good sold and consequently have greater ending inventory value utilizing LIFO inventory system. The company would generate higher net income and increase the earnings. Also‚ LIFO could reflect
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a management accounting compare and contrast the above methods and recommend suitable method to achieve the organizational objective | P2.3‚M3.3‚D1.1 | Assignment | One of the most important knowledge about accounting is 3 basic inventory techniques or cost flow assumptions: FIFO (stands for first-in‚ first-out)‚ LIFO (stands for last-in‚ first-out) and WAVG (stands for weighted – average). In this article‚ I just want to focus on FIFO and LIFO. Let’s review these concepts: FIFO means that the
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FIFO and LIFO Inventory Methods Tonia Green Accounting 211 – Financial Accounting Excelsior College FIFO and LIFO Inventory Methods This paper will provide a comparison of the accounting implications of valuing inventory under the First-in‚ First-out (FIFO) and Last-in‚ First-out (LIFO) methods. With very few exceptions‚ every business depends on an inventory to operate. Whether the business provides a service or sells products to its consumers‚ supplies and stock are required to operate
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LIFO‚ last-in-first-out and FIFO‚ first-in-first-out the two most common inventory accounting methods. The choice of the method of inventory accounting by a small business can directly impact its balance sheet‚ income statement‚ and statement of cash flows. Not only do companies have to track the number of items sold‚ but they have to track the cost of each item. These two methods are ways in which they can do that. Each will have a different effect on their financial statements. How is Inventory
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LIFO VERSUS FIFO: UPDATING WHAT WE HAVE LEARNED Nicole Thorne Jenkins Doctoral Student in Accounting Morton Pincus Associate Professor of Accounting College of Business Administration The University of Iowa 108 PBAB Iowa City‚ IA 52242-1000 U.S.A. 319/335-0915 FAX 319/335-1956 morton-pincus@uiowa.edu September 1998 (version 1.2) LIFO VERSUS FIFO: UPDATING WHAT WE HAVE LEARNED 1.0 INTRODUCTION The statutory mandate in U.S. tax law that firms using the last-in first-out (LIFO) inventory
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FIFO and LIFO accounting Methods are accounting techniques used in managing inventory and financial matters involving the amount of money a company has tied up within inventory of produced goods‚ raw materials‚ parts‚ components‚ or feed stocks. FIFO stands for first-in‚ first-out‚ meaning that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact newest physical object has been tracked and sold; this is just an inventory technique. LIFO stands for last-in
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10 units of inventory that cost a total of $190. During June‚ Amazon purchased and sold goods as follows: June 8 Purchase 30 units @ $20 June 14 Sale 25 units @ $40 June 22 purchase 20 unit @ $22 June 27 Sale 30 unit @ $40 Requirements: Under the FIFO and LIFO method 1. How much is Amazon’s cost of goods sold 2. How much is Amazon’s gross profit or loss 3. Journalize all Amazon’s inventory transactions for June. 4. Which method maximizes gross profit? Q2: Collins Industries’ inventory records show
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Inventory Valuation 1 Lewis Corporation Case: 6-2 Page: 173 2 Lewis Corporation Traditionally used inventory valuation method: FIFO Uses periodic inventory system 3 Inventory Transaction 2005-2007 No. of Cartons Price per Carton 2005 2006 2007 2005 2006 2007 Beginning balance 1840 1020 1040 $20.00 Purchases 600 700 1000 $20.25 $21.50 $22.50 800 700 700 $21.00 $21.50 $22.75 400 700 700 $21.25 $22.00 $23.00 200 1000 700 $21.50 $22.25 $23.50 Sales 2820 3080 2950 $34
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RH-42 SECTION A IBA BBA 2OTH BATCH ACCOUNTING SUBMITTED TO: MELITA MEHJABEEN SUBMITTED ON: 30/ 04/ 2012 FIFO [ FIRST IN FIRST OUT ] | ADVANTAGES | DISADVANTAGES | * If the business trades perishable goods with the use of FIFO it can avoid obsolescence of stock. * Closing stock valuation is done upon the most recent prices paid for stock which takes into account the rate of inflation. * The method is more realistic as the inventory is issued in the order in which they
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1. INVENTORY A in X The inventory of Product A and data on purchases and sales for a two-month period in Company X follow. Company X closes its books at the end of each month. It uses a periodic inventory system. Apr. 1 10 17 30 Beginning inventory Purchase Sale Ending inventory 50 units 100 units 90 units 60 units @€204 @€220 May 2 14 22 30 31 Purchase Purchase Purchase Sale Ending inventory 100 units 50 units 60 units 200 units 70 units @€216
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