COST ACCOUNTING
METHODS OF COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Specific identification
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First-in, first-out (FIFO)
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Last-in, last-out (LILO)
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Weighted-average
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All of these are approved by GAAP.
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Detailed explanation-1: -One of the most basic differences is that GAAP permits the use of all three of the most common methods for inventory accountability-weighted-average cost method; first in, first out (FIFO); and last in, first out (LIFO)-while the IFRS forbids the use of the LIFO method.
Detailed explanation-2: -LIFO is prohibited under IFRS and ASPE. However, under the US Generally Accepted Accounting Principles (GAAP), it is permitted.
Detailed explanation-3: -Accountants have two main options for inventory valuation: FIFO (First In First Out) and LIFO (Last In First Out). LIFO is only allowed under US GAAP and is a choice that US companies need to make. For this reason, FIFO is the more dominant valuation method internationally as it is permitted under IFRS.
Detailed explanation-4: -Solution(By Examveda Team) Stock take is not the methods of inventory costing.