1. (a)
Introduction: LIFO means last in first out. It is an
To compute:
1. (b)
Introduction: FIFO means first in first out. It is an inventory valuation method. The amount incurred on the first product will be realized first. Sales are computed using price of older purchase while inventory is computed using recent purchases.
To compute: Current ratio, inventory turnover, and days’ sales in inventory.
2
Introduction: Inventory valuation is the methods used by the companies to determine the value of ending inventory while preparing the financial statements. Different company uses different valuation methods. Inventory valuation impacts the cost of goods sold and net income.
To comment: On the results of current ratio, inventory turnover, and days’ sales in inventory.

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Chapter 5 Solutions
FINANCIAL & MANAGERIAL ACCT W/ACCESS
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