Week 3 DQ2 -Merchandise Inventory - ACC205 Principles of Accounting I - Ashford University - ACC205 Principles of Accounting I Horngren C.T Harrison W.T

Week 3 DQ2 -Merchandise Inventory - ACC205 Principles of Accounting I - Ashford University

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ACC205 Principles of Accounting I Horngren, C.T., Harrison W.T., Oliver M.S. (2011). Accounting (9th ed). Upper Saddle River, New Jersey: Pearson Prentice Hall: ISBN: 9780132569057 Merchandise Inventory. Describe the inventory valuation methods FIFO and LIFO. Which items are included in ending inventory under each method? Under FIFO, it is assumed that items purchased first are sold first. Under LIFO, it is assumed that items purchased last are sold first. Example: FIFO vs. LIFO Cost of goods sold Cost of ending inventory Beginning inventory + Purchases FIFO, Perpetual $11,000 $8,600 $19,600 LIFO, Perpetual $12,400 $7,200 $19,600 FIFO assumes that items purchased FIRST are sold FIRST. --> Cost of old purchase is recorded as cost of goods sold.

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