Inventory Valuation Methods

Prior to beginning work on this discussion forum, read Chapter 5: Merchandising Operations and the Multiple-Step Income Statement and Chapter 6: Reporting and Analyzing Inventory in your course text.

In your initial post,

  • Identify the differences between F.I.F.O., L.I.F.O., and the average-cost method of inventory valuation.
    • Be sure to include the effects of each method on cost of goods sold and net income in your answer.
  • Discuss the differences between the physical movement of goods and cost flow assumptions.
    • Your answer should illustrate understanding of the three major inventory valuation methods, and the relationship between physical inventory flow and cost flow assumptions.