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A company should determine cost for inventory purposes by the inventory cost flow method most clearly reflecting its periodic income. Required:

(1) Explain the fundamental cost flow assumptions of the average cost. FIFO and LIFO inventory cost flow methods.

(2) Discuss the reasons a company uses LIFO in an inflationary economy. ]

(3) Where there is evidence that the utility of goods in their disposal in the ordinary course of business will be lest than cost . Explain the proper accounting treatment and under what concept that treatment is justified?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9990682

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