In: Accounting
For all four inventory costing methods, cost of goods sold is always equal to the sum of beginning inventory plus net purchases.
True
False
Using FIFO ( although the results will be same for all 4 methods):
FIFO |
Cost of Goods available for sale |
Cost of Goods Sold |
Ending Inventory |
||||||
Units |
Cost/unit |
COG for sale |
Units sold |
Cost/unit |
COGS |
Units |
Cost/unit |
Ending inventory |
|
Beginning Inventory |
100 |
$ 10.00 |
$ 1,000.00 |
100 |
$ 10.00 |
$ 1,000.00 |
0 |
$ 10.00 |
$ - |
Purchases: |
|||||||||
50 |
$ 11.00 |
$ 550.00 |
10 |
$ 11.00 |
$ 110.00 |
40 |
$ 11.00 |
$ 440.00 |
|
TOTAL |
150 |
$ 1,550.00 |
110 |
$ 1,110.00 |
40 |
$ 440.00 |
---Beginning Inventory + Net purchases
= $ 1,550
---Cost of Goods Sold = $ 1,110
---Ending Inventory = $ 440
---Cost of Goods Sold + Ending Inventory = 1110 + 440 = $ 1,550 = Beginning Inventory + Net Purchases.