Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Periodic Inventory - FIFO, LIFO, and Average Cost

Financial Accounting

5. Inventory

Periodic Inventory - FIFO, LIFO, and Average Cost

Previous problem

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Multiple Choice

In the context of inventory valuation, the letters FIFO refer to:

First-In, Final-Out

Final-In, First-Out

Fastest-In, Fastest-Out

First-In, First-Out

Previous problem

Verified step by step guidance

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.