Ivor B. Gunn has just started in the retail business. His transactions in the first period of trading are as follows:

(a) Calculate the closing stock and gross profit for this period, assuming (1) FIFO, (2) LIFO and (3) weighted average.

(b) The audited accounts of limited companies have to show a true and fair view of the state of affairs, and of the profit for the year.
Which of the three methods do you recommend as best satisfying this legal requirement as regards (1) the stock figure on the balance sheet, and (2) the gross profit—justifying your answer in each case.

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Bought Bought Sold Bought Sold 30 automatic back scratchers at 10 each 40 automatic back scratchers at 12 each 50 automatic back scratchers at 20 each 50 automatic back scratchers at 15 each 50 automatic back scratchers at 20 each 6.1.84 13.1.84 15.1.84 18.1.84 22.1.84