Week 3: Inventories

Question 1

Different ways you can take inventory

Answer 1

LIFO
FIFO
Weighted Average

Question 2

FIFO definition and examples

Answer 2

First in first out, meaning the last stuff a company buys

Example: milk and perishables

Question 3

LIFO definition and examples

Answer 3

Last in first out, meaning first one we bought

Example: Gasoline

Question 4

Which inventory technique in not allowed in IFRS?

Answer 4

LIFO is not allowed in this accounting system

Question 5

Weighted average is used for

Answer 5

non-fluctuating inventories

Question 6

COGS equation

Answer 6

= Starting inventory + purchases - ending inventory

Also

= available inventory - ending inventory

Question 7

Beginning inventory 100 tables that costs $10 each

During the year, the firm made two purchases:
May 7 250 tables for $12
Oct 2 150 tables for $14

Now let us assume its the end of the year, and that there are 180 left in our ending inventory

What is the cost of what we sold using LIFO, FIFO, and weighted average?

Answer 7