After studying this chapter, you should be able to:
LO1 Explain the difference between a perpetual inventory system and a periodic inventory system.
LO2 Explain which physical quantities of goods should be included in inventory.
LO3 Determine the expenditures that should be included in the cost of inventory.
LO4 Differentiate between the specific identification, FIFO, LIFO, and average cost methods used to determine the cost of ending inventory and cost of goods sold.
LO5 Discuss the factors affecting a company’s choice of inventory method.
LO6 Understand supplemental LIFO disclosures and the effect of LIFO liquidations on net income.
LO7 Calculate the key ratios used by analysts to monitor a company’s investment in inventories.
LO8 Determine ending inventory using the dollar-value LIFO inventory method.
