Respuesta :
If the company uses the LIFO perpetual inventory system then the cost of the ending inventory is net income should be understood when cost of goods sold is overestimated.
Ending inventory is the worth of goods that are still available for purchase at the end of an accounting period. It consists of the initial stock plus net purchases less cost of goods sold. Inventory purchases that are considered "net purchases" have had any returns or discounts subtracted. Even when the total number of inventory units at the end of each accounting period is the same, the inventory valuation method used has an effect on the final inventory value. When there are rising prices or inflationary pressures, the FIFO (first in, first out) technique is chosen since it produces a higher ending inventory valuation than LIFO (last in, first out). In light of various business situations, some companies purposefully use LIFO or FIFO strategies. Performing a physical count at the end of each month and then valuing the inventory using a method like LIFO, FIFO, or Weighted Average Method are the two most straightforward ways to determine closing inventory. The majority of the time, it is not feasible to do a physical count. As a result, ending inventory is estimated using an estimation method.
To know more about inventory please refer: brainly.com/question/14184995
#SPJ4
