Which of the following methods are commonly used for costing inventory under both perpetual and periodic inventory systems?

• A. Last-In, First-Out (LIFO)
• B. Weighted Average Cost
• C. First-In, First-Out (FIFO)
• D. Specific Identification

Answer: (D)

Verified step by step guidance

1. Understand the concept of inventory costing methods: Inventory costing methods are techniques used to assign costs to inventory and cost of goods sold. These methods impact financial statements and tax calculations.
2. Learn about the perpetual and periodic inventory systems: The perpetual system continuously updates inventory records, while the periodic system updates inventory records at the end of an accounting period.
3. Explore the Last-In, First-Out (LIFO) method: Under LIFO, the most recent inventory purchases are assumed to be sold first, leaving older inventory as ending inventory. This method is applicable to both perpetual and periodic systems.
4. Understand the Weighted Average Cost method: This method calculates the average cost of all inventory items available for sale during the period. It is suitable for both perpetual and periodic systems.
5. Examine the First-In, First-Out (FIFO) and Specific Identification methods: FIFO assumes the oldest inventory is sold first, while Specific Identification tracks the cost of individual items. Both methods are compatible with perpetual and periodic systems.