ADM 1340 Chapter Notes - Chapter 6: Consignor, Inventory Turnover, Accounting Equation

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ADM 1340 Full Course Notes
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ADM 1340 Full Course Notes
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Determining ownership of goods two questions are answered when determining the ownership of goods do all of the goods included in the count belong to the company does the company own any goods not included in the count. Fifo (first in, first out) - the cost of the rst item purchased is considered to be the cost of the rst item sold. Average - the cost is determined using a weighted average of the cost of the items purchased. Fifo & average are known as cost formulas because they assume a ow of costs that may not be the same as the actual physical ow of goods. Speci c identi cation is normally used in a perpetual inventory system. Fifo & average are used in both perpetual and periodic inventory systems requirement: speci c identi cation method of cost determination can be used only for goods that are not ordinarily interchangeable.

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