Inventory

Question 1

LIFO

Answer 1

During a period of rising prices, LIFO results in a high COGS and low ending inventory. The reverse is true for FIFO.

Question 2

Lower of cost or net realizable value vs Lower of cost market

Answer 2

FIFO and average-cost method: These use lower of cost of
net realizable value
LIFO: This uses lower of cost or market

Question 3

NRV formula

Answer 3

Net realizable value (NRV) = Selling price - Costs

Question 4

Ceiling vs Floor

Answer 4

Ceiling= NRV
Floor= NRV- Profit Margin