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Moving average inventory method is not GAAP (generally accepted accounting principles). LIFO (last in, first out) or FIFO (first in, first out) are GAAP. FIFO is the most common method and easy to compute; however LIFO may be used but is much more complicated to compute unless your businesses computer system computes the LIFO computation.
What else can I help you with?
What is an acceptable method of determining inventory cost under GAAP?
One can use FIFO, LIFO, or Average Costing as acceptable methods for accounting. Standard costing would be an unacceptable answer.
Is weighted average inventory valuation GAAP?
Yes, along with FIFO and LIFO, Weighted average is a generally accepted accounting principle.
Does GAAP require a physical inventory Why?
GAAP stands for generally accepted accounting principles, and a physical inventory is needed when using GAAP. One reason it is necessary is, if you don't account for your shrinkage by doing a physical count, your total ending inventory costs will be inflated.
How often can a company change its inventory valuation methodology and still be compliant with GAAP?
once
Is inventory recorded at the sales price or cost?
Inventory is recorded at cost, not at sales price. This includes all expenses incurred to bring the inventory to its current condition and location, such as purchase price, shipping, and handling costs. The sales price is only relevant when the inventory is sold, at which point revenue is recognized. This method aligns with the generally accepted accounting principles (GAAP) and ensures accurate financial reporting.
What is the GAAP method for determining what inventory is obsolete or slow moving?
The GAAP method for obsolete or slow moving inventory is to account for all inventory using either market value or cost method. The method which results in the lower amount is the one that is used.
What is an acceptable method of determining inventory cost under GAAP?
One can use FIFO, LIFO, or Average Costing as acceptable methods for accounting. Standard costing would be an unacceptable answer.
Is weighted average inventory valuation GAAP?
Yes, along with FIFO and LIFO, Weighted average is a generally accepted accounting principle.
Does GAAP require a physical inventory Why?
GAAP stands for generally accepted accounting principles, and a physical inventory is needed when using GAAP. One reason it is necessary is, if you don't account for your shrinkage by doing a physical count, your total ending inventory costs will be inflated.
What are the advantages of the weighted average method?
The weighted average method is advantageous because it smoothens out fluctuations in inventory costs by incorporating both old and new cost data. It is simple to calculate and less subject to distortions from extreme price changes. This method is also compliant with generally accepted accounting principles (GAAP).
Is the Percentage-Of-Completion Method GAAP?
yes it is
Does lower of cost or market value rule violate historical cost basis?
the cost principle GAAP (generally accepted accounting principles) is violated by using this method of inventory cost flow as is the principle of conservatism as using this method will create the largest amount of net income which is good to show shareholders, bad for tax purposes and contradicts these two GAAP's.
How often can a company change its inventory valuation methodology and still be compliant with GAAP?
once
How do you determine the value of Ending Inventory do you use the value the inventory was purchase at or the value of the inventory at the months end?
Hello - I use the value the inventory was purchased at. If you need to, then you can devalue the inventory by stating a write down on obsolete goods, or alternatively, product that you will have to take a discount on. Technically, you have a few options - LIFO (last in, first out), FIFO most common - First in, first out, and average - average is not GAAP in Canadian accounting, but is workable in the states. Hope this helps you!
Is inventory recorded at the sales price or cost?
Inventory is recorded at cost, not at sales price. This includes all expenses incurred to bring the inventory to its current condition and location, such as purchase price, shipping, and handling costs. The sales price is only relevant when the inventory is sold, at which point revenue is recognized. This method aligns with the generally accepted accounting principles (GAAP) and ensures accurate financial reporting.
Is Completion of Production method accepted by GAAP?
it is acceptable according to GAAP only in the extraordinary circumstances when forecasting the amount of work completed to date is not possible.
Major differences between IFRS and us gaap?
Well, one major difference is that IFRS's do not allow the use of LIFO for accounting for inventory. Many US companies use the LIFO method as a way to lower corporate taxes.The way to adjust inventory is different as well. In US GAAP the the revaluation amount is calculated by using the ceiling, floor and replacment cost. In IFRS the net present value is used and is calculated by subtracting the amount of selling costs from the selling price.
