Apply the inventory costing methods of specific identification, weighted average, FIFO, and LIFO by using a periodic system.
- The purchase price of inventory items may change frequently, and several alternatives are available to assign costs to the goods sold and those that remain in ending inventory.
- Specific identification assigns the actual costs of acquisition to items of inventory. In some circumstances, it is not practical to do this.
- Three other methods involve making assumptions about the cost of inventory.
- Weighted average assigns the same unit cost to all units available for sale during the period.
- The FIFO method assumes that the first units purchased are the first units sold.
- The LIFO method assumes that the last units purchased are the first units sold.