10 5 teacher by 65AKdK

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									10.5 Inventory
Valuation
First In, First Out (FIFO)
FIFO – one method of finding value of
  ending inventory (end of quarter/yr)

   ex: milk @ store

   Based on cost of recently purchased items

   Example inventory record top p. 446 in
    textbook
Example 1
Use the FIFO method to find the value of the
 ending inventory of paper shredders
 showin in the illustration in the example on
 p. 446:
    Last In, First Out (LIFO)
LIFO – one method of finding value of ending
  inventory

   ex: plates @ buffet

   Based on cost of items purchased 1st

   Good when prices are rising (end up paying
    less in income taxes)
Example 2
Use the LIFO method to find the value of the
 ending inventory of paper shredders
 shown in the illustration on p. 446:
    Weighted Average
Weighted Avg – one method of finding value of
 ending inventory

   Based on avg price of items bought from
    beginning to end

   Useful if prices vary a lot
  Example 3
Use the weighted avg method to find the value
 of ending inventory of ZPM Business
 Products paper shredders from p. 446:
Wrap It Up

								
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