What are methods of determining the cost of inventory


Response to the following questions:

1. Because of imperfections, an item of merchandise cannot be sold at its normal selling price. How should this item be valued for financial statement purposes?

2. How is the method of determining the cost of inventory and the method of valuing it disclosed in the financial statements?

3. What is the lifo reserve, and why would an analyst be careful in interpreting the earnings of a company that has liquidated some of its lifo reserve?

4. Why would a company such as Target Corporation prefer a quick response inventory policy?

 

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Cost Accounting: What are methods of determining the cost of inventory
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