ACCT1501 2011S1 1 Week 9 Tutorial Questions: DQ 8.8; Problems 8.4, 8.8, 9.11, CASE 8B 8 FIFO, weighted average and LIFO are assumptions made about the order in which units of inventory flow through the business. FIFO assumes that the first items acquired are the first ones sold and, therefore any ending inventory on hand consists of the most recently acquired units. Thus the older costs will appear in cost of goods sold and the more recent costs on the balance sheet. Weighted average assumes that ending inventory and cost of goods sold are composed of a mixture of old and new units. LIFO assumes the opposite of FIFO. Recent costs will appear in cost of goods sold and the older costs in the balance sheet. The three methods will give similar profit figures if inventory prices are fairly constant. They would give identical profit figures if cost prices of opening inventory and purchases
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