1. TASK: Insert the appropriate word in the text below:
аbility - allocated to - net income – perpetual – regardless – unique
Inventory valuation method FIFO (First In, First Out) is based on the principle that the first inventory goods received will be the first inventory goods sold. FIFO results in the highest ending inventory, the lowest cost of goods sold, and the highest ________________. This is because the oldest and lowest costs are ________________ cost of goods sold. Ending inventory is valued with the newest and highest cost; which most accurately approximates replacement cost.
Net income will increase because the lowest costs were used; which is not an accurate reflection of current cost to current revenue. Another ________________ factor FIFO offers, is the ________________ to have the same amounts for ending inventory and cost of goods sold ________________ of the use of periodic or ________________ inventory systems.
2. CHECK YOUR SPEAKING
|
ability |
[ ˈ əˈbɪlɪti ] |
здатність |
|
allocated to |
[ ˈæləʊkeɪtɪd tuː ] |
відноситься на |
|
net income |
[ nɛt ˈɪnkʌm ] |
чистий дохід |
|
perpetual |
[ pəˈpɛʧʊəl ] |
безперервний |
|
regardless |
[ rɪˈgɑːdlɪs ] |
незалежно від |
|
unique |
[ juːˈniːk ] |
унікальний |
3. SEE CORRECT ANSWER
Inventory valuation method FIFO (First In, First Out) is based on the principle that the first inventory goods received will be the first inventory goods sold. FIFO results in the highest ending inventory, the lowest cost of goods sold, and the highest net income. This is because the oldest and lowest costs are allocated to cost of goods sold. Ending inventory is valued with the newest and highest cost; which most accurately approximates replacement cost.
Net income will increase because the lowest costs were used; which is not an accurate reflection of current cost to current revenue. Another unique factor FIFO offers, is the ability to have the same amounts for ending inventory and cost of goods sold regardless of the use of periodic or perpetual inventory systems.
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