ACCT 2220 Chapter 6: Accounting Chapter 6
Document Summary
Speci c identi cation method: an inventory cost determination method used when goods are distinguishable and not ordinarily interchangeable. First-in, first-out (fifo) cost method: an inventory cost method that assumes that the costs of the earliest (older) goods acquired are the rst to be recognized as the cost of goods sold. Average cost method: an inventory cost method that assumes that the goods available for sale are homogeneous or non-distinguishable. Weighted average unit cost: the average cost of inventory weighed by the number of units purchased at each unit cost. Choice of cost determination method: use speci c identi cation if goods are not interchangeable, or goods have been produced and segregated for speci c products, if not, use fifo or average cost. Financial statement effects: inventory effects statement of nancial position (listed as asset) and income statement (listed as expense)