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Title: Financial Accounting: Inventory Cost Flow and LCNRV
Description: Summary of accounting for Inventory Cost Flow and LCNRV.
Description: Summary of accounting for Inventory Cost Flow and LCNRV.
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Methods for inventory cost flow:
1
...
- appropriate for inventories that are not ordinarily interchangeable or are segregated for
specific projects
...
First-In, First-Out (FIFO)
- assumes the first units purchased are the first to be sold
...
- cost if goods sold at old prices
...
3
...
- used for a periodic inventory system
...
Moving Average
- the average cost of each inventory item in stock is re-calculated after every inventory
purchase
...
Lower of Cost and Net Realizable Value (LCNRV)
- present inventories in the Statement of Financial Position at the lower of its cost and net
realizable value
...
- either Allowance Method or Direct Method
...
Includes:
a
...
Conversion Cost
c
...
Excludes:
a
...
Storage Cost (Unnecessary)
c
...
- both beginning and ending inventories are measured at cost
Title: Financial Accounting: Inventory Cost Flow and LCNRV
Description: Summary of accounting for Inventory Cost Flow and LCNRV.
Description: Summary of accounting for Inventory Cost Flow and LCNRV.