
Concept explainers
a
Introduction:
The Periodic inventory system of recording the inventory records includes updating the inventory accounts only after the end of regular periodic intervals. Therefore, the cost of goods sold and the cost of ending inventory is computed at the end of the period.
The specification identification method identifies the specific lot of goods from which the goods have been sold for the purpose of computing the cost of goods sold.
The cost of ending inventory and cost of goods sold under specific identification method.
b
Introduction:
The weighted average method takes into consideration the average cost per unit for the purpose of computing the cost of goods sold and balance inventory.
The cost of ending inventory and cost of goods sold under weighted average method.
c
Introduction:
First in first out method implies that the goods received first have been issued first for the purpose of computing the cost of goods sold.
Cost of ending inventory and cost of goods sold under FIFO method.
d
Introduction:
Last in first out method implies that the inventory which has been received most recently is issued first for the purpose of the cost of goods sold.
Cost of ending inventory and cost of goods sold under LIFO.
e
Gross Profit is the difference between the sales revenue and the cost of goods sold during the period. It refers to the gross margin earned on the sale of the product.
The method that yields the highest net income.

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Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
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