Task Team of FUNDAMENTAL ACCOUNTING School of Business Sun Yat-sen University Ending inventory under FIFO approximates current replacement cost. LIFO better matches current cost in cost of goods sold with revenue (4) Inventory must be reported at market value when market is lower than cost (5) Retail inventory method and gross profit method can be used to estimate ending Inventory Key Points 1. items included in merchandise inventory 2. costs of merchandise inventory 3. inventory costing methods 4. lower of cost or market 5. inventory errors 6. inventory estimations Reading material 1. Larson, K D, T. Jensen, and R. Carroll, 2002, Fundamental Accounting Principles, McGraw-Hill Ryerson 2. Libby, R, P.A. Libby, D.G. Short G. Kanaan, and M. Gowing, 2003, Financial Accounting McGraw-Hill Ryerson 3. Abdel-Khalik, A.R., The effect of LiFO-Switching and Firm Ownership on Executive Pay. Journal of Accounting Research(Autumn 1985), 427-477 4. Cushing, B E. and M.J. Leclere, Evidence on the Determinants of Inventory Accounting Policy Choice, The Accounting Review(April 1992), 355-366 5. Dopuch, N and M. Pincus, Evidence on the Choice of Inventory Accounting Methods: LIFO vS FIFO, Journal of Accounting Research(Spring 1988), 28-59Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University 6 Ending inventory under FIFO approximates current replacement cost. LIFO better matches current cost in cost of goods sold with revenue. （4） Inventory must be reported at market value when market is lower than cost. （5） Retail inventory method and gross profit method can be used to estimate ending inventory. Key Points 1. items included in merchandise inventory 2. costs of merchandise inventory 3. inventory costing methods 4. lower of cost or market 5. inventory errors 6. inventory estimations Reading material 1. Larson, K.D., T. Jensen, and R. Carroll, 2002, Fundamental Accounting Principles, McGraw-Hill Ryerson. 2. Libby, R., P.A. Libby, D.G. Short, G. Kanaan, and M. Gowing, 2003, Financial Accounting, McGraw-Hill Ryerson. 3. Abdel-Khalik, A.R., The effect of LIFO-Switching and Firm Ownership on Executive Pay, Journal of Accounting Research (Autumn 1985), 427-477. 4. Cushing, B.E. and M.J. Leclere, Evidence on the Determinants of Inventory Accounting Policy Choice, The Accounting Review (April 1992), 355-366. 5. Dopuch, N. and M. Pincus, Evidence on the Choice of Inventory Accounting Methods: LIFO vs. FIFO, Journal of Accounting Research (Spring 1988), 28-59