Section 2: 30–40%2C
Inventory
Inventory is a top-tested FAR topic. AICPA tests cost flow methods (FIFO, LIFO, weighted-average), lower of cost or NRV, and the effects of inventory errors on financial statements.
What AICPA Wants You to Know
- 1Calculate ending inventory and COGS under FIFO, LIFO, and weighted-average
- 2Apply the lower of cost or net realizable value (LCNRV) rule
- 3Analyze the impact of inventory errors on net income and retained earnings
- 4Identify what costs are included in inventory (product costs vs. period costs)
- 5Understand the LIFO reserve and LIFO liquidation