Multiple Choice
An advantage of the weighted average method under a periodic inventory system is that it:
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5. Inventory
Periodic Inventory - FIFO, LIFO, and Average Cost
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
In the context of inventory valuation, the letters FIFO refer to:
A
First-In, Final-Out
B
Final-In, First-Out
C
Fastest-In, Fastest-Out
D
First-In, First-Out
Verified step by step guidance1
Understand that FIFO stands for 'First-In, First-Out,' which is a method used in inventory valuation and cost flow assumption.
Recognize that under FIFO, the oldest inventory items (the ones purchased or produced first) are the ones that are sold or used first.
Learn that this method is commonly used to match the cost of goods sold with the actual flow of inventory, especially in industries where inventory items are perishable or time-sensitive.
Compare FIFO with other inventory valuation methods, such as LIFO (Last-In, First-Out) or Weighted Average, to understand its unique characteristics and applications.
Apply FIFO in practice by organizing inventory records to ensure the costs of the earliest purchases are assigned to the cost of goods sold, while the costs of more recent purchases remain in ending inventory.
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