ACC 100 Chapter 5: Summary Notes

• School: Ryerson University
• Department: Accounting
• Course: ACC 100
• Professor: Cheryl Dyson

Document Summary

Used by businesses that sell a small number of expensive products which can be easily identified. Ex. art, diamonds, cars: average cost: calculate the average --> add the items together and divide by the number of items in the group. Must recalculate the average after each new inventory purchase. Used for products that are not unique (homogeneous) Used by businesses that puts out their inventory and customers can choose what they want. Ex. retail stores that sell clothing: first-in, first-out (fifo): assumes that the oldest inventory is always sold first and the newest inventory is still in inventory (on the shelf) The value of the inventory remaining is calculated based on the items purchased last. Used by businesses that can control what the customers can take --> the method would match the physical flow of goods. Only need to know fifo for calculating questions on test.