ACC 113 Lecture Notes - Lecture 14: Income Statement, Wells Fargo, Public Company Accounting Oversight Board

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Specific identification method - record item at physical cost. An actual physical-flow costing method in which particular items sold and items still in inventory are specifically costed to arrive at cost of goods sold and ending inventory easily manipulated. 3 assumed cost flow methods all gaap, always periodic inventory system. First-in, first-out (fifo) inventory costing method that assumes that the earliest goods purchased are the first to be sold. Usually parallels the actual flow of merchandise. Last-in, first-out (lifo) inventory costing method that assumes that the latest units purchased are the first to be sold. Results in highest net cash from operating activities and quality of earnings. Lifo reserve companies using lifo must report the difference between inventory using lifo and inventory using fifo. Average cost inventory costing method that uses the weighted-average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold always in between fifo and lifo.

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