W3D2.docx - Explain the four merchandise inventory methods...

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Explain the four merchandise inventory methods and provide an example for each. According to our text, there are four different methods to determine inventory costs. The methods are specific identification, first-in, first-out (FIFO), last-in, first-out (LIFO), and weighted average cost. Each of these methods are capable of determining approximate flow of inventory costs within a business. There are also used to determine cost of goods sold and ending inventory results (Miller-Nobles, Mattison, Matsumura, 2018). Specific Identification: According to our text, the specific identification method uses the specific cost of each unit of inventory to determine ending inventory and cost of goods sold. This gives the company the ability to know exactly which item was sold and how much that item cost (Miller-Noble, Mattison, Matsumura, 2018, pg. 327) This method is particularly good for businesses that sell unique or easily identifiable products.

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