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inventory methods

Name and briefly describe each of the inventory methods that are generally accepted in the United States. Which one is the best? Why? this is for an accounting class so i am assuming that it would be related to that field.

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There are three basis approaches to valuing inventory that are allowed by GAAP:

(a) First-in, First-out (FIFO): Under FIFO, the cost of goods sold is based upon the cost of material bought earliest in the period, while the cost of inventory is based upon the cost of material bought later in the year. This results in inventory being valued close to current replacement cost. During periods of inflation, the use of FIFO will result in the lowest estimate of cost of goods sold among the three approaches, and the highest net income.

(b) Last-in, First-out ...

Solution Summary

Name and briefly describe each of the inventory methods that are generally accepted in the United States. Which one is the best? Why? this is for an accounting class so i am assuming that it would be related to that field.

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