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ethod to use or are there other determinants that are more important in your opinion? Provide details explaining your opinion

ethod to use or are there other determinants that are more important in your opinion? Provide details explaining your opinion

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter5: Inventories And Cost Of Goods Sold
Section: Chapter Questions
Problem 5.1P
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Various inventory methods including FIFO, LIFO, and average cost provide a process to identify raw materials, work-in-process, and finished goods.

Discuss the benefits of using one method verses the other and their effect on the income statement. Does a company decide, based on taxes, which method to use or are there other determinants that are more important in your opinion? Provide details explaining your opinion in your discussion.

Expert Solution
Step 1

FIFO stands for first in first out. It values the inventory on the basis of first costs. The goods that are sold are being valued at the first cost that was purchased first. 

 

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