which inventory cost flow assumption to adopt?

Inventories are asset items that a company holds for sale or goods that it will use or consume in the production of goods to be sold. The description and measurement of inventory require careful attention. During a given period, companies typically purchase merchandise at several different prices. If a company prices inventories at cost and it made numerous purchases at different unit costs, which cost price should it use?

The actual physical flow of goods and the cost flow assumption often greatly differ. There is no requirement that the cost flow assumption adopted be consistent with the physical movement of goods.

A company’s major objective in selecting a method should be to choose the one that, under the circumstances, most clearly reflects periodic income.

WhiteyBoard uses LIFO (last in, first out)

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assumption, cost, flow, inventory, lifo, whiteyboard

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