Asked by Mason Rogers on Jun 11, 2024
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If a company uses the FIFO cost assumption the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.
FIFO Cost Assumption
"First-In, First-Out," an inventory costing method that assumes the first items put into inventory are the first ones sold, affecting the calculation of cost of goods sold and ending inventory.
Perpetual
A system or inventory accounting method where updates are made continuously to record every sale or purchase.
Periodic Inventory System
An inventory system under which the company does not keep detailed inventory records throughout the accounting period but determines the cost of goods sold only at the end of an accounting period.
- Understand the fundamentals and impacts of various inventory valuation methods such as LIFO, FIFO, and specific identification.
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Learning Objectives
- Understand the fundamentals and impacts of various inventory valuation methods such as LIFO, FIFO, and specific identification.
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