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Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.
FIFO: In First-in-First-Out method, items purchased initially are sold first. So, the value of the ending inventory consists the recent cost for the remaining unsold items.
LIFO: In Last-in-First-Out method, items purchased recently are sold first. So, the value of the ending inventory consists the initial cost for the remaining unsold items.
Average cost method: In Average Cost Method the cost of inventory is priced at the average rate of the goods available for sale.
Formula for weighted average cost method:
To compute: The ending inventory at September 30, and cost of goods sold using the FIFO methods.
To prove: The amount allocated to cost of goods sold under FIFO method.
To compute: The ending inventory at September 30, and cost of goods sold using the LIFO methods.
To prove: The amount allocated to cost of goods sold under LIFO method.
To compute: The ending inventory at September 30, and cost of goods sold using the average-cost methods.
To prove: The amount allocated to cost of goods sold under average-cost method.
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Financial Accounting
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