COST ACCOUNTING
INVENTORY AND PRODUCTION MANAGEMENT
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Direct Check Method
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Spot Check Method
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Detailed explanation-1: -First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement’s cost of goods sold (COGS).
Detailed explanation-2: -The First-in First-out (FIFO) method of inventory valuation is based on the assumption that the sale or usage of goods follows the same order in which they are bought. In other words, under the first-in, first-out method, the earliest purchased or produced goods are sold/removed and expensed first.
Detailed explanation-3: -A pre-shipment inspection (PSI) is a random assessment comprising a detailed review of finished goods before shipment.