Exam 2 POFA

Results in cost of goods sold being closets to current product cost

LIFO

Results in highest income during periods on inflation

FIFO

Results in highest ending inventory during periods of inflation

FIFO

Smooths out (or evens out) cost during periods of inflation

Weighted Average

Is not particle for many business

Specific identification

Puts more emphasis or significance on the unit cost of the larger number of units purchased

Weighted average

Goods in transit at year end to be received are not included in the physical count (FOB shipping point)

Inventory - understated / COGS - olove

Net sales

= sales returns and allowances + sales discounts

Perpetual system

Running record of merchandise responsible with every purchase and sale

Periodic system

Physical count of inventory to determine inventory on hand

FOB shipping point

Buyer responsible for inventory while in transit

FOB destination

Seller is responsible while in transit