What determines the charge or cost to the GL Account when issued?

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The charge or cost to the General Ledger (GL) account when an item is issued is determined primarily by the costing model selected by the storeroom's site. The costing model defines how costs for inventory items are calculated and includes methods such as Average Cost, FIFO (First In, First Out), LIFO (Last In, First Out), or specific identification. Each of these models has a unique method for calculating the cost of items at the time of issuance, which directly influences the amount charged to the GL account.

For instance, if the Average Cost model is in use, the cost will be calculated based on the average price of all items in stock. Conversely, if FIFO is selected, the oldest cost of purchased items will be used, ensuring that the cost reflects the most recent inventory purchases. This systematic approach to costing ensures accurate financial reporting and inventory management.

The other options, while relevant to inventory management, do not define the GL charge itself. The type of tool issued, for example, may influence operational decisions and accounting procedures, but it does not dictate how the cost is recorded in the GL. Similarly, the condition of the asset or the time of issuance may impact depreciation and other assessments, but they do not alter the fundamental costing mechanism

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