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Accounting

Describe how costs flow from inventory to cost of goods sold for the following methods: (a) FIFO and (b) LIFO.

(a) FIFO assumes costs flow in the order incurred. The earliest cost incurred is sent to cost of goods sold on the income statement first.

(b) LIFO assumes costs flow in the reverse rder incurred. The most recent cost incurred is sent to costs of goods sold on the income statement.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9437987

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