1 How to calculate COGS and Ending Inventory using either t.pdf
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The document outlines the calculations of cost of goods sold (COGS) and ending inventory using FIFO and LIFO methods. It explains the impact of these cost flow methods on key financial ratios and details LIFO reserves, as well as conversions to FIFO basis. Additionally, it describes LIFO liquidation, its identification, effects on net income, and necessary adjustments to financial statements.
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1 How to calculate COGS and Ending Inventory using either t.pdf
- 1. 1. How to calculate COGS and Ending Inventory using either the FIFO or LIFO cost flow assumption. 2. Understand the effects that these cost flow methods have on common ratios (i.e. ROA, ROE, Inventory Turnover, Current ratio, etc.) 3. Know what the LIFO Reserve is. 4. Know how to convert COGS and Ending Inventory from a LIFO basis to a FIFO basis 5. Know what a LIFO liquidation is, how to know that one has occurred, what effects it has on net income, and how to adjust the financial statements when one has occurred.