Questioh Which of the following is not an acceptable invento

Questioh Which of the following is not an acceptable inventory costing method? Average cost Last-in, first-out Last-in, last-out O First-in, first-out Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT A 7

Solution

Answer(1): Option \"C\" is correct that says, \"Last in Last Out\". Last in last out is not an acceptable method of inventory.

LIFO- It says last in first out that means goods which are purchased latest and put on shelf first, will be sold first. This method is applicable for non-perishable products.

FIFO- It says first in first out that means, goods that are purchased first, should be sold first. This method is applicable for Perishable products and items which have expiry date.

Average Cost Method- Average cost of inventory is calculated by dividing the average cost of goods sold of leftover items by the number of leftover items.

Answer(2): Inventory Equation:

Ending Inventory = Beginning Inventory + Net Purchase - Cost of Goods sold

Beginning Inventory = Ending inventory + Cost of goods sold - Net purchase

In this question, Beginning Investory is to be found so-

Beginning Inventory = 20000 + 560000 - 540000

Beginning Inventory = $40000

Hence option \"D\" is correct.