Question: 1. What are the three primary cost flow assumptions? How does the specific identification method differ from these three primary cost flow assumptions?
2. Which cost flow assumption generally results in the highest reported amount for ending inventory when inventory costs are rising? Explain.
3. Which cost flow assumption generally results in the highest reported amount of net income when inventory costs are rising? Explain.
4. What does it mean that FIFO has a balance-sheet focus and LIFO has an incomestatement focus?