Notes

chapter 8

zero cost ; in this method , the value od inventory is taken as zero . generally the item , which can not be sold is value at zero cost

2 average cost : under the average approach m both inventory and that cost the cost of goods sold are based upon the average cost of all unit received in stcok

3 fifo : under fifo, the the cost of goods sold upon the based upon the cost of material bought earliest in the period while the cost of inventory is based upon the cost of material bought later in the year. this result in inventory being value in the current replacement cost

4 : fifo perpetual : under the perpetual system the inventory account is constantly ( os perpetually ) changing when retailer purchases merchandise, the retailer debit its inventory account for the cost , when the retailer sells the merchandise to its customer its inventory account is credited and its cost of good sold rather than staying dormant and it dose with the periodic method the inventory account balance is continuously updated

5: with perpetual fifo : the first and oldest cost are the first move from the inventory account and debited to the cost os goods sold account . the end result under perpetual fifo in the same as under periodic fifo . in the other words the first cost are the same whatever you move the out od inventory with each sale ( perpetual ) or weather you wait until the year is over (periodic )

6: last purchased cost : this method value the inventory based on the replacement cost of item . thus the method uses the last purchased price for a product to determine the total value of that product

7 : lifo annual : tally assume the sale of newest goods first taking into account the current financial year .