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Inventory flow assumptions
Flat TV uses a perpetual inventory system. Shown below are Flat TV's beginning inventory of a particular product and purchases during January:
On 23 January (prior to the purchase on 25 January), Flat TV sold 13 units of this product.
Determine the cost of goods sold relating to the sale on 23 January under each of the following flow assumptions. (Show your computations.)
(a) FIFO $__________________
(b) Weighted average cost (or moving average) $______________
Inflation Premium (IP)
The additional amount that investors require on the return of an investment to compensate for the loss of purchasing power due to inflation.
Maturity Risk Premium (MRP)
The Maturity Risk Premium is the additional return investors demand for holding longer-term securities due to increased risk of price fluctuations and uncertainty over a long period.
Treasury Bonds
These are long-term, fixed-interest government debt securities with a maturity of more than ten years. They are considered safe investments because they are backed by the U.S. government.
Capital Gain/Loss
The increase or decrease in the value of an investment or real estate, calculated by the difference between the purchase price and the sale price.
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