ACC week 3 discussion 2.docx - The four merchandise...

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The four merchandise inventory methods are specific identification, FIFO, LIFO, and weighted-average methods. These are all financial costing methods that calculate the true value of inventory, not the retail value of inventory. The specific identification method attaches the actual cost of a product/service to an identifiable unit of product. Car dealerships frequently use this method due to it being easy to apply the unit to the inventory when buying/selling large numbers of vehicles. The FIFO method, or first-in first-out method, states that the true cost of goods that are first purchased will be the first to be charged to Cost of Goods Sold, or COGS. (Miller-Nobles, Mattison, Matsumura, 2018) An example of this would be found in a grocery store’s inventory of perishable goods, such as fresh milk, or fruits and vegetables. The LIFO method, of last-in first-out method, states that the cost of the most recent purchases will be the first costs to be charged to the COGS. (Miller-Nobles, Mattison, Matsumura, 2018) An example of

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