9.0 INVENTORY!

Question 1

Cost of Goods Sold formula?

Answer 1

1. Beginning Inventory
2. (+) Net cost of Purchases
3. (=) Cost of goods available 4 sale
4. (-) Ending inventory
5. (=) Cost of goods sold

Question 2

What do you do to arrive at Cost of Goods available for sale (in the cost of goods formula) ?

Answer 2

Take beginning inventory and ADD Net Cost of Purchases

Question 3

What do you know / What do say , with regards to FIFO ?

Answer 3

Same result under periodic or perpetual.

Question 4

LIFO (Last in First out)

Answer 4

• COGS = recent costs
• Ending Inventory= older costs

Question 5

FIFO (First in First Out)

Answer 5

*COGS= older costs
*Ending Inventory= recent costs

Question 6

Is inventory accounted for under the LIFO or retail inventory methods?

Answer 6

• If no (such as FIFO , average etc) , a simplified lower of cost or net realizable value rule is used