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Business

Accounting

How do you complete Inventory by three methods, cost of merchandise sold

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Identify each item as describing the FIFO method, LIFO method, or average cost method of inventory valuation. A. Involves calculating the total number of units in the warehouse FIFO LIFO Average cost B. To determine cost of goods sold, begin with the earliest goods acquired FIFO LIFO Average cost C. To determine merchandise inventory balance, begin with the earliest goods acquired FIFO LIFO Average cost
Question 12 Which report shows the book (purchase or cost) value of inventory items with quantity on hand? Product/Service List O Transaction List by Inventory Item Sales by Product/Service Summary O Inventory Valuation Summary (or Detail)
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What financial statement is merchandise inventory reported on, and in what section?
Explain the retail inventory method of estimating ending inventory.
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The inventory valuation method which assumes that the items purchased first are the first items to be sold is called the _____ method. average costLIFO specific identificationFIFO
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