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Lecture

Chapter 6 - Observations on Invertory Costing Methods.docx

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Department
Accounting
Course
ACTG 1P12
Professor
Norman Chasse
Semester
Winter

Description
Observations on Inventory Costing MethodsWhen prices are rising FIFO will produce a lower Cost of Goods Sold COGS and higher profit vs the Weighted Average or LIFOWhen prices are falling FIFO will produce a higher Cost of Goods Sold COGS and lower profits vs Weighted Average or LIFO Using Cost of Goods Sold to estimate Ending InventoryGross ProfitGP o Gross Profit PercentageGPSales o Since GPSalesCOGS o COGS1GPCOGSBeginning InventoryPurchasesEnding Inventory o Therefore we can solve for Ending Inventory or for Purchases assuming we have the remaining figures Also note o Beginning Inventory xx oPurchasesxx oCOGASxx oEnding Inventory xx o COGS xx Inventory Errors
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