Inventory Control Methods
     Help businesses account for Ending 
      Inventory and help determine Cost of Goods 
      Sold
     If Inventory consists of large, identifiable 
      items, it is easy to compute the above.
     If Inventory consists of lots of items that are 
      not specifically identifiable, such as in a 
      hardware store, it is not very easy to compute 
      the above.
     Businesses use Inventory Control Methods 
      to help with these computations.
    Assumptions
     Because of fluctuations in purchase price of 
      the inventory, businesses must make 
      assumptions about which items have sold 
      and which remain.
     These Methods are:
      ◦Specific Identification
      ◦First In First Out
      ◦Last In Last Out
      ◦Weighted Average
   Specific Identification
    The actual cost of each item is assigned to 
    the item.
    Firms that sell big ticket items such as cars, 
    appliances, or furniture may use specific 
    identification.
    This method is rarely used in practice today.
    First In First Out
     Based on the assumption that the first 
      items purchased are the first items sold
     Assumes the newest acquired items remain 
      in inventory 
     During periods of inflation, FIFO will result in 
      the lowest Cost of Goods Sold and the 
      highest income.
    Last In First Out
     Based on the assumption that the last items 
      purchased are the first items sold
     Assumes the oldest acquired items remain 
      in inventory.
     During periods of inflation, the use of LIFO 
      results in the highest Cost of Goods Sold 
      and the lowest income.