44 - Companies should use same inventory method from period...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Increasing Costs Cost of goods sold FIFO lowest Based on older costs LIFO highest Based on recent costs Ending inventory FIFO highest Based on recent costs LIFO lowest Based on older costs Opposite relationships exist when costs are decreasing Tax Advantage of LIFO Comparison of Inventory Methods FIFO Balance sheet More recent costs Income Statement Does not match current costs with revenue LIFO Balance Sheet Old, outdated costs Income Statement Matches current costs with revenue Accounting Principles Related to Inventory Consistency
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Companies should use same inventory method from period to period • Disclosure Companies should disclosed inventory method used • Conservatism Companies should “write down” inventory if market price falls below cost Lower-of-Cost-or-Market (LCM) • Inventory should be reported at whichever is lower – cost or market Market = current replacement cost • If cost is lower, no adjustment needed • If market is lower, Inventory is decreased to market value Cost of goods sold is increased...
View Full Document

This note was uploaded on 06/15/2011 for the course ACCT 23020 taught by Professor Dorff,p during the Spring '08 term at Kent State.

Page1 / 2

44 - Companies should use same inventory method from period...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online