Ch 6 Notes - Chapter6Notes 10:58:00 Ch 6 Accounting for...

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Chapter 6 Notes 19/02/2007 10:58:00 Ch 6: Accounting for Merchandising Business—Advanced Topics - Inventory 1. Estimate the cost of ending inventory. FIFO, LIFO, Weighted Average 2. Apply the lower of cost or market rule. 3. Apply the net realizable value rule. - Ways To Value Inventory 1. FIFO First In, First Out (The way merchandise is sold.) The FIFO cost flow method requires that the cost of the items purchased first be assigned to cost of goods sold. 2. LIFO Last In, Last Out (Last things purchased is the first thing sold.) The LIFO cost flow method requires that the cost of the items purchased last be charged to cost of goods sold. 3. Weighted Average (Average Cost) Weighted Average cost flow method, you first calculate the average cost per unit by dividing the total cost of the inventory available by the total number of units available. - Lower of Cost or Market
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Ch 6 Notes - Chapter6Notes 10:58:00 Ch 6 Accounting for...

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