Inventory – Basic Accounting of Inventory

Inventory is considered a current asset because a company normally sells it within a year or within its operating cycle. Inventory consists of products acquired for resale to customers. For many companies, inventory is a major asset and a significant source of revenue.

  • Lower-of-Cost-or-Market (LCM) Rule
  • Cost Flow Assumptions
    • Specific Identification Method
    • Average-Cost method
    • First-in, First-out (or FIFO) method
    • Last-in, First-out (LIFO) inventory method
    • Financial Statement Effects of Inventory Method
  • The Choice of Inventory Method
  • Valuation of Inventories at Lower of Cost or Market
  • The inventories of manufacturers
  • Analysis of Inventories
  • Comparing LIFO and FIFO Firms
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