Inventory Management and Costing Concepts

This video tutorial explains how to use the Last In, First Out (LIFO) method to calculate the cost of goods sold and ending inventory in a periodic inventory system. It highlights that LIFO is not allowed under IFRS and provides a detailed example of transactions for a retail company. The tutorial walks through the process of calculating cost of goods sold and ending inventory, emphasizing the importance of considering the most recent purchases. It also discusses the need for adjustments when a physical inventory count reveals discrepancies.

What does LIFO stand for in inventory management?

• Last In, First Out

• Last In, First Order

• Least In, First Out

• Least In, First Order

Which accounting standard does not allow the use of LIFO?

• FASB

• IASB

• IFRS

• GAAP

On which date did the company purchase 30 units at $40 each?

• January 5th

• January 13th

• January 1st

• January 8th

How many units were sold on January 8th?

• 20 units

• 30 units

• 50 units

• 40 units

In a periodic inventory system using LIFO, when is the cost of goods sold calculated?

• At the time of each sale

• At the end of the period

• At the beginning of the period

• Continuously throughout the period

What is the cost of goods sold if 25 units are at $50 each and 15 units are at $40 each?

• $1,500

• $1,850

• $1,300

• $2,000

How many units remain in ending inventory at $40 each after the sale?

• 20 units

• 15 units

• 25 units

• 10 units

What is the ending inventory value if 20 units are at $35 each and 15 units are at $40 each?

• $1,300

• $1,600

• $1,400

• $1,500

What should be done if a physical count shows less inventory than calculated?

• Ignore the discrepancy

• Adjust the ending inventory value

• Adjust the cost of goods sold

• Both adjust the ending inventory and cost of goods sold

If the physical count shows $1,220 in inventory, what is the adjusted cost of goods sold?

• $1,930

• $1,300

• $1,220

• $1,850