Hello.
I have a quick accounting question. In the evaluation of Cost of
Goods Sold, one can use 3 different methods for evaluating
inventory: LIFO, FIFO, or Average Warehouse cost. In an application
which allows the user to adjust inventory quantities, if the user
discovers that the physical inventory in a cycle count is less than
the electronic accounts, its easy to attribute the missing inventory
as shrinkage. But what if the user discovers an on-hand quantity
that is greater than the electronic accounts? For example:
Jan 01, 2001 - Bought 1 Pencil for $3.00
Jan 03, 2001 - Bought 1 Pencil for $3.50
Jan 21, 2001 - Bought 1 Pencil for $4.50
Total:
3 Pencils
$11.00
However, when the cycle count is performed on Jan 31, 2001, 2 more
pencils are discovered. What do Generally Accepted Accounting
Principles say regarding the value of the 4th and 5th pencils? If a
sale of a pencil occurs on Feb 01, 2001, using LIFO, what is the
COGS?
Oliver?
Sorry for the off-topic question. Any pointers would be greatly
appreciated.
Mike Mascari
mascarm@mascari.com