Inventory Valuation Concepts

This video tutorial from TLC Tutoring Company covers the perpetual LIFO method of inventory valuation. It explains how inventory is updated after each transaction and how the last items purchased are the first to be sold. The tutorial walks through setting up an inventory chart, analyzing sales, and calculating the cost of goods sold and ending inventory. It emphasizes the importance of understanding cost flow assumptions in accounting.

What does the perpetual aspect of inventory valuation mean?

• Inventory is updated only after sales.

• Inventory is updated at the end of the year.

• Inventory is updated after each transaction.

• Inventory is updated monthly.

In the perpetual LIFO method, which units are considered sold first?

• The oldest units in inventory.

• The newest units in inventory.

• The units with the lowest cost.

• The units with the highest cost.

When recording a purchase, what is important to remember?

• Only add the new purchases to the inventory.

• Update the inventory without considering the old units.

• Bring down the old units first, then add the new purchases.

• Only update the inventory at the end of the month.

On February 6th, how many units were purchased and at what cost per unit?

• 30 units at $9 each

• 60 units at $5 each

• 100 units at $6 each

• 50 units at $8 each

How many units were sold on March 1st?

• 60 units

• 100 units

• 90 units

• 50 units

After the sale on March 1st, what was the remaining inventory?

• 60 units at $5 each and 20 units at $6 each

• 70 units at $5 each and 10 units at $6 each

• 60 units at $5 each and 10 units at $6 each

• 50 units at $5 each and 20 units at $6 each

On July 2nd, how many units were purchased and at what cost per unit?

• 60 units at $5 each

• 30 units at $9 each

• 50 units at $8 each

• 100 units at $6 each

How many units were sold on July 6th?

• 50 units

• 90 units

• 70 units

• 30 units

What is the cost of goods sold if 6 times 90 equals 540?

• $400

• $1320

• $50

• $270

What should you focus on when practicing inventory valuation problems?

• The sales price of the units

• The cost of the units

• The number of units sold

• The date of the transactions