Chapter 6, Problem 11Q

To determine

Inventory: It refers to the total stock of such goods or items which are held by the business organizations with the purpose of sale.

Inventory cost flow: It refers to the flow (movement) of inventory when it is purchased or sell by the business organization.

The various inventory cost flow methods are:

• First-in, first-out (FIFO)
• Last –in, first-out (LIFO)
• Average-cost

To identify: The inventory cost flow method used by each company and the company which has reported higher gross profit.