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How can I identify items in inventory?

  1. Specific identification method 
    1. This method identifies costs of each inventoried item with the cost of acquisition. 

  2. First-in-first-out (FIFO)

    1. Items in inventory purchased or produced first are sold first. 

  3. Last-in-first-out (LIFO)

    1. Items in inventory purchased or produced last are sold first. 

  4. To value inventory, use:

    1. The cost method to determine cost of acquisition and merchandise. 

    2. The lower of cost or market method used to compare the market value of each inventoried item with its cost, and then using the lower value as the inventory value. 

    3. The retail method uses the total retail selling price of goods at the end of each year and reduces the cost by averaging the percentage of the total selling price. 


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