The costing method that best matches revenue and costs is the Specific Identification Method.

The FIFO, LIFO, and Average Cost Methods are common methods (cost flows) used to assign cost to inventory.

The IRS has special rules for a business that uses the LIFO Costing Method.

The FIFO Costing Method (cost flow) assumes that the last goods purchased are the first goods sold.

The FIFO Costing Method used with either the Periodic or Perpetual Inventory Methods produce the same Ending Inventory value.

Using the LIFO Costing Method, the cost of the Ending Inventory is made up of the cost of the goods acquired first.

A strong argument for using the LIFO Costing Method is that it matches the cost of the most recent purchases with current revenues.

The LIFO Costing Method assumes that the first (earliest) goods purchased are the first goods sold.

Assuming rising prices, the costing method that minimizes income tax is the FIFO Costing Method.

When the Average Costing Method is used with the Perpetual Inventory Method a new average cost is calculated each time a purchase is made.

The Gross Profit Method is only acceptible for use internally.

LIFO used with the Retail Inventory Method does not have any special associated IRS rules.

Gross Profit and the Retail Methods are both based on determining the relationship of costs to selling price.

A weakness of the Periodic Inventory Method is that the Cost Of Goods Sold is not known until a physical count of the inventory is made.

Using the Retail Inventory Method eliminates the need for determining unit costs and maintaining detailed product cost records.

The Lower Of Cost Or Market Rule is based on conservatism.

The term Market Value means current replacement cost subject to a ceiling and floor.

The Lower Of Cost Or Market Rule is allowed when used with the LIFO Costing Method.

Accountants never depart from the cost basis when valuing Ending Inventory.

The Lower Of Cost Or Market rule accounts for the loss of potential inventory value due to changes such as price and obsolescence.

The two basic methods of accounting for merchandise inventory are the Perpetual and Periodic Methods.

No entry is made at the time of a sale to the Cost Of Goods Sold Account or the Inventory Account when the Perpetual Inventory Method is used.

The Periodic Inventory Method requires maintaining detailed records of all purchases and sales.

Adjusting Entries are required to record the Ending Inventory and the Cost Of Goods Sold amounts when using the Periodic Inventory Method.

Using the Periodic Method, a physical inventory count is normally performed to determine the values of the Cost of Goods Sold and Ending Inventory.