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Accounting At Your Fingertips, 2e by George Murray, CPA.

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5.4 Inventory Valuation Methods

Specific Identification

Average Cost

First In, First Out (FIFO)

Last In, First Out (LIFO)

You’ve carefully recorded the cost of each purchase or product made for inventory. You’ve even taken a physical inventory so you know how much you have left in inventory. Now comes the tricky part, especially because your inventory may be composed of similar products that can have different costs. How do you identify which goods, at which costs, have been sold? In other words, what’s the best way to value your ending inventory?

This subchapter takes you through the four major methods of applying costs to inventory of like items—specific identification; average cost; first in, first out (FIFO); and last in, first out (LIFO)—and ...

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