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Ownership of Goods in Transit:
1. FOB Shipping Point
2. FOB Destination Point |
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| (start at first products) |
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FIFO reports higher income
but LIFO = lower taxes which leads to more cash flow = higher quality of earnings
(vv) |
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= Cost of Goods Sold/ Avg. Inventory
High = minimal funds tied up in inventory
(too high = losing sales opp.) |
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| some argue LIFO during inflation |
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| is closer to current cost |
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