Identify the Inventory Valuation Method That Is Being Described for Each

question 77

Essay

Identify the inventory valuation method that is being described for each situation below. In all cases, assume a period of rising prices. Use the following to identify the inventory valuation method:
$\begin{array}{|l|l|}\hline \text { FIFO } & \text { First in, first out } \\\hline \text { LIFO } & \text { Last in, first out } \\\hline \text { SI } & \text { Specific identification } \\\hline \text { WA } & \text { Weighted average } \\\hline\end{array}$ a. The method that can only be used if each inventory item can be matched with a specific purchase and its invoice.
b. The method that will cause the company to have the lowest income taxes.
c. The method that will cause the company to have the lowest cost of goods sold.
d. The method that will assign a value to inventory that approximates its current cost.
e. The method that will tend to smooth out erratic changes in costs.

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Definitions:

Government Services

Public services provided by the government to its citizens, including healthcare, education, and safety.

Private Firms

Businesses owned by private individuals or groups, not by the government or public.

Government in the Sunshine Act

A U.S. law that requires many federal agencies to conduct their meetings in public and provide notice of meetings.

Federal Agencies

Government bodies in the United States that deal with government policy and administration.