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Question 18QS_4

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Financial & Managerial Accounting
Found in: Page 261
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Identify the inventory costing method best described by each of the following separate statements. Assume a period of increasing costs.

_____4. Recognizes (matches) recent costs against net sales.

LIFO method.

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Step by Step Solution

Definition of Net Sales

Net sales refer to the amount of sales made by the business entity after adjusting any discount allowed and sales return.

Fill in the Blanks

LIFO Recognizes (matches) recent costs against net sales.

Explanation: Under the LIFO method the cost of goods sold includes the expenses incurred in the acquisition of recent inventory. Therefore, it is said that the LIFO method matches recent costs against net sales.

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