Compare values of ending inventory and cost of goods sold

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Question - When merchandise available for sale includes items purchased at different prices, a business must select a method of valuing the inventory and the cost of the items sold. Answer the following questions for EACH of these three methods: LIFO, FIFO, and Weighted Average.

1. What are the LIFO, FIFO, and Weighted Average inventory valuation methods? Explain briefly how each method is calculated.

2. Compare the values of ending inventory and cost of goods sold that result from using the three different methods. In times of rising prices which inventory value is higher, lower, or in between? Which one produces higher, lower, or in between cost of goods sold? Why does this happen?

3. Briefly describe the financial advantages and disadvantages of each method.

Reference no: EM131695196

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