1 markInventory Valuation Methods

CSEC Principles of Accounts · January 2017 · Paper 2 · Question 2(a)

Mhalal and Jack trade in bicycle tyres and disagree on inventory valuation methods (FIFO vs LIFO).

Explain in ONE sentence how LIFO differs from the FIFO method of inventory valuation.

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Other parts of this question

2(b)Complete the inventory valuation form using the FIFO method, and state the value of inventory as at 31 March 2016.[11 marks]
2(c)Using the information from the inventory form, prepare the Trading Account for Mhalal and Jack for the three months ended 31 March 2016.[7 marks]
2(d)Describe in ONE sentence the effect on cost of goods sold and gross profit if the LIFO method had been used which yields a lower closing inventory valuation.[1 mark]

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