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FIFO and average-cost are the two most common cost flow 



1
FIFO and average-cost are the two most common cost flow assumptions made in costing inventories. The amounts assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in ending inventory values under the FIFO and average-cost cost bases when the price of inventory items purchased during the period have been (1) increasing, (2) decreasing, and (3) remained constant.




2
In a period of rising prices, the inventory reported in Leary Company's statement of financial position is close to the current cost of the inventory. Maris Company's inventory is below its current cost. Identify the inventory cost flow method being used by each company. Which company has probably been reporting the higher gross profit?




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