1. What is a periodic inventory system? What is a perpetual inventory system? Why might an organization choose one over the other?
2. How do accountants keep track of the number of units sold if they are using the periodic inventory method?
3. What are the four basic cost flow methods for inventory valuation? What are the implications for financial reporting?
4. How might IFRS affect inventory costing if incorporated into US GAAP?
5. Assume your organization has the following inventory changes during the year:
Beginning Inventory 15 units valued at $10,000 each
February purchases 13 units at $11,500 each
June purchases 20 units at $12,000 each
Total Units Used 42
Calculate the value of the ending inventory and the value of the inventory used (the inventory expense) for the year, using both the FIFO and the LIFO method of cost-flow.