The ending inventory on hand is calculated by the

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first items to be sold. The ending inventory on hand is calculated by the oldest inventory price received in that period. 3. Last-in, first-out (LIFO) Method: is the reverse of FIFO. the LIFO method expects the last item in will be the first item sold, the ending inventory will be based on the price of the most recent item received. 4. Weighted-Average Method: After each purchase a cost per unit is calculated. This is done by taking the total cost of goods available for sale and dividing it by the number of items available. How are financial statements affected by using the four different methods? When it comes to the financial statements, these four methods will have different effects but those effects will also vary depending on the Inventory costs. 1. For the Specific Identification Method, the company is keeping detailed records of each item sold so the cost of goods sold will be a more true number, but the effect it will have on the financial statements can vary. 2. When it comes to the FIFO method, the cost of goods sold will be lower. This means that the net income looks higher and is better for attracting investors.

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