Company should adjust its financial statements for each prior period presented. Thus, financial statement info about prior periods will be on the same basis as the new accounting pricipal. It adjusts the carrying amounts of assets and liabilites as of the beginning of the first year presented. It will reflect the cumulative effect on prior periods. Company should also adjust an opening balance of retained earnings or net assets as of the beginning of the first year presented.
Weighted average inventory valuation method is method in which inventory purchased at any price is put together to calculate one price for allocation in contrast to FIFO or LIFO.
Following are inventory valuation methods: 1 - Lifo (Last in first out) 2 - Fifo (First in first out) 3 - Average method.
lifo
Weighted Average
Average Cost Method: Under this method average cost is calculated by following farmula:Average cost of unit= Total cost of inventory / total number of units
Weighted average inventory valuation method is method in which inventory purchased at any price is put together to calculate one price for allocation in contrast to FIFO or LIFO.
Following are inventory valuation methods: 1 - Lifo (Last in first out) 2 - Fifo (First in first out) 3 - Average method.
lifo
LIFO method
Weighted Average
Wal-Mart uses the last-in/first-out method (LIFO).
Average Cost Method: Under this method average cost is calculated by following farmula:Average cost of unit= Total cost of inventory / total number of units
Inventory valuation methods: 1- LIFO (Last in first out) 2- FIFO (First in first out) 3 - Average Method
Revenue-Cost of Goods Sold(CGS)=Gross Margin. The valuation of inventory drives the cost of goods sold (CGS). The higher the value of your inventory, the higher your CGS, thus lower gross margin. The lower the valuation of your inventory, the lower your CGS, thus higher gross margins.
adjusted selling price method , retail price of the inventory is calculated and marjinal profit is deducted from it generally used in retail business also known as Retail inventory method
Weighted average method which requires to use the weighted average cost per unit of inventory at the time of each sale.
fifo