1. Merge a cost flow assumption (FIFO, LIFO, and averaging) with a method of monitoring inventory (periodic or perpetual) to arrive at six different systems for determining reported inventory figures.
2. Understand that a cost flow assumption is only applied in computing the cost of ending inventory units in a periodic system but is used for each reclassification from inventory to cost of goods sold in a perpetual system.
3. Calculate ending inventory and cost of goods sold under both a periodic and a perpetual FIFO system.
4. Recognize that periodic and perpetual FIFO systems will arrive at identical account balances.