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Description: Does the term last-in in the LIFO method mean that the items in the inventory are assumed to bethe most recent (last) acquisitions? Explain.

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Does the term last-in in the LIFO method mean that the items in the inventory are assumed to be the most recent (last) acquisitions? Explain.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 12Q: How long does it take an inventory error affecting ending inventory to correct itself in the...

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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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Does the term last-in in the LIFO method mean that the items in the inventory are assumed to be
the most recent (last) acquisitions? Explain.

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What does an increase in inventory imply? How would this increase in inventory be reported under the indirect method?
Which of the following would cause periodic ending inventory to be overstated? A. Goods held on consignment are omitted from the physical count. B. Goods purchased and delivered, but not yet paid for, are included in the physical count. C. Purchased goods shipped FOB destination and not yet delivered are included in the physical count. D. None of the above
What is the basic assumption underlying the gross profit method? How may the gross profit percentage for the prior year be modified to provide a better estimate of the inventory value?
How long does it take an inventory error affecting ending inventory to correct itself in the financial statements? Explain.
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Does the term last-in in the LIFO method mean that the items in the inventory are assumed to be the most recent (last) acquisitions?
Which of the following methods of inventory valuation assumes that the cost of the most recently acquired items is the cost of goods sold? A) LIFO B) FIFO C) Average cost D) Specific identification
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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A method of inventory valuation wherein each particular item in the ending inventory isvalued on the basis of the replacement price, in the volume in which they are usuallypurchased or produced by the a. Moving average inventory method.b. Market inventory method.c. Elapsed time inventory method.d. Perpetual inventory method.
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Inventory valuation is used to calculate the cost of goods sold and cost of ending inventory. The most widely used methods are LIFO, FIFO and average cost method. You are required to find out the inventory system applied, the method of inventory valuation used, and what does inventory consists of with their respective amount?