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Unformatted text preview: matching of sales revenues and
cost of goods sold (in different periods). 43 • UFO causes problems with balance sheet reporting, but better matching of cost of goods sold
with sales revenues. Lower taxes because lower net income, with higher cost of goods sold
expenses. Weighted average: Blends older and newer costs of inventory together.
Lower of Cost or Market: (LCM): Important to note that if cost of inventory is higher than the actual market value the items could be sold, inventory values must be written down (a loss to the business).
Due to conservatism constraint: Careful to not overstate assets (inventory). Once inventory is written
down, it can NEVER be written backu...
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This note was uploaded on 01/22/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida - Tampa.
- Spring '08
- Financial Accounting