ACC 205 WEEK 3 DQ 2 Inventory Valuation Methods: FIFO vs. LIFO and Their Impact on Cost of Goods Sold and Ending Inventory

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Inventory Valuation Methods: FIFO vs. LIFO and Their Impact on Cost of Goods Sold and Ending Inventory ACC 205 WEEK 3 DQ 2 Merchandise Inventory. Describe the inventory valuation methods FIFO and LIFO. Which items are included in ending inventory u nder each method? Under FIFO, it is assumed that items purchased first are sold first. Under LIFO, it is assumed that items purchased last are sold first. Example: FIFO vs. LIFO Cost of goods sold Cost of ending inventory Beginning inventory + Purchases FIFO, Perpetual $11,000 $8,600 $19,600 LIFO, Perpetual $12,400 $7,200 $19,600 FIFO assumes that items purchased FIRST are sold FIRST. -- > Cost of old purchase is recorded as cost of goods sold. -- > Cost of recent purchases is recorded as cost of ending inventory. -- > When price goes up, old price is lower than recent price.
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