You just took a new job as a controller of a large company that purchases and sells surf boards (has inventory). The owner has asked you to advise her on how she should select the correct inventory valuation method for the inventory (LIFO, FIFO and Weighted Average). What would be your response?

You just took a new job as a controller of a large company that purchases and sells surf boards (has inventory). The owner has asked you to advise her on how she should select the correct inventory valuation method for the inventory (LIFO, FIFO and Weighted Average). What would be your response?

Name: Subject : AccountingYou just took a new job as a controller of a large
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Description: Subject : AccountingYou just took a new job as a controller of a large company that purchases and sells surf boards (has inventory). The owner has asked you to advise her on how she should select the correct inventory valuation method for the invento

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.1P

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Similar questions

A friend of yours recently opened Abracadabra, a sportswear shop specializing in monogrammed athletic gear. Most merchandise is special ordered for customers. However, a small inventory is on hand. Your friend does not understand why a physical inventory is necessary before preparing the financial statements. She knows how much she paid for all merchandise purchased. Why not simply use this amount for cost of goods sold? After all, it has been paid for. Write a brief memo explaining the purpose of the physical inventory and why she should not use the cost of purchases as cost of goods sold.
Suppose I have two items in my inventory and I use FIFO to value it. I start to buy a new item and use LIFO. Is this considered a change in accounting principle if I use two different methods? Please explain.
Hi thank you so much for your response, the income statement goes a little more in depth, as part of cost of goods sold it also asks for begginning and ending inventory, goods available for sale, and purchases; all under the cost of goods sold section. Theres also a selling and administrative expenses section that asks for stuff like accounts payable and receivable, buildings and equipment, cash, common stock, notes payable, prepaid insurance, etc. I'll insert an image of what the question looks like. Each of the empty spaces has a dropdown list.
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