Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

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Multiple Choice

Under the LIFO inventory method, it is assumed that the cost of the latest units purchased are:

the first to be assigned to cost of goods sold

the last to remain in ending inventory

averaged with earlier costs for cost of goods sold

never included in cost of goods sold

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Verified step by step guidance

Understand the concept of LIFO (Last-In, First-Out) inventory method: Under LIFO, the most recent inventory purchases are assumed to be sold first, meaning the cost of the latest units purchased is assigned to the cost of goods sold.

Analyze the implications of LIFO: Since the latest inventory costs are assigned to cost of goods sold, the older inventory costs remain in ending inventory. This method is often used during periods of rising prices to match higher costs with current revenues.

Compare LIFO with other inventory methods: Unlike FIFO (First-In, First-Out), where the oldest inventory costs are assigned to cost of goods sold, LIFO focuses on the most recent costs. It also differs from the weighted average method, which averages all inventory costs for cost of goods sold and ending inventory.

Evaluate the options provided in the problem: The correct answer aligns with the principle of LIFO, which states that the latest units purchased are the first to be assigned to cost of goods sold, and the last to remain in ending inventory.

Conclude the reasoning: Based on the explanation of LIFO, eliminate incorrect options such as averaging costs or excluding costs from cost of goods sold, and confirm the correct answer as the first to be assigned to cost of goods sold.