ACT 205 Chapter Notes - Chapter 6.2: Weighted Arithmetic Mean, Net Income
Document Summary
Combining operating income with nonoperating revenues and expenses. Four methods for inventory costing: specific identification, first-in, first-out (fifo, last-in, last-out (lifo, weighted-average cost. Matches each unit of inventory with its actual cost. Used primarily by companies with unique and expensive products with low sales volume. We assume that the first units that were purchased are the first ones sold. We assume that the last units purchased are the first ones sold. We assume that both cost of goods sold and ending inventory consist of a random mixture of all goods available for sale. Assume each unit of inventory has an equal cost to the weighted-average unit cost of all inventory items weighted average unit cost= (cost of goods available for sale)/(number of units available for sale) Recording inventory purchases and sales on a perpetual basis. Calculates the balance of inventory once per period based on a physical count of inventory on hand. Periodically adjust for purchases and sales of inventory.
