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Concept Introduction:
Income Statement:
Income statement is a financial summary about company's revenues, expenses,
Periodic Inventory System:
It updates the closing inventory in the ledger after the physical count is done.
Last in first out (LIFO):
It is the
First in first out (FIFO):
It is the inventory valuation method in which inventory purchased in the beginning of the year is first sold out. Hence the closing inventory count is done from end.
Weighted Average:
It is the inventory valuation in which total value of inventory is divided by the total inventory.
To prepare:
Comparative Income statement using three methods when a company uses periodic inventory system.
Concept Introduction:
Last in first out (LIFO):
It is the inventory valuation method in which inventory purchased at the end is first sold out. Hence the closing inventory count is done from beginning.
First in first out (FIFO):
It is the inventory valuation method in which inventory purchased in the beginning of the year is first sold out. Hence the closing inventory count is done from end.
Weighted Average:
It is the inventory valuation in which total value of inventory is divided by the total inventory.
To Explain:
To explain the changes in financial results by using inventory costing methods.
Concept Introduction:
Last in first out (LIFO):
It is the inventory valuation method in which inventory purchased at the end is first sold out. Hence the closing inventory count is done from beginning.
First in first out (FIFO):
It is the inventory valuation method in which inventory purchased in the beginning of the year is first sold out. Hence the closing inventory count is done from end.
To Explain:
The advantages and disadvantages of LIFO and FIFO method.
Want to see the full answer?
Check out a sample textbook solution
Chapter 6 Solutions
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