Week 3 Discussions and Required Resources
Part 1 and Part 2 must be at least 200 words
Part 1: Perpetual Inventory System
Present a detailed explanation of the recording of purchases under a perpetual inventory system. Use hypothetical figures to illustrate the perpetual inventory system. After presenting your hypothetical figures, discuss how a perpetual inventory system is different from a periodic inventory system. Your answer should illustrate understanding of the perpetual inventory system.
Part 2: Inventory Valuation Methods
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. Also 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.
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2016). Financial accounting: Tools for business decision making (8th ed.). Retrieved from https://content.ashford.edu/
Chapter 5: Merchandising Operations and the Multiple-Step Income Statement
Chapter 6: Reporting and Analyzing Inventory
(Chapters 5 & 6 are in the attachments)
Bloom, R., & Cenker, W. J. (2008, December 31). The death of LIFO?. Journal of Accounting. Retrieved from http://www.journalofaccountancy.com/issues/2009/jan/deathoflifo.htm
Review the PowerPoint presentations for Chapter 5 and Chapter 6 found on the textbook publisher’s website.
(Chapters 5 & 6 PowerPoints are in the attachments)