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

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Multiple Choice

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

Final-In, First-Out

First-In, Final-Out

First-In, First-Out

Fastest-In, Fastest-Out

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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 in accounting to calculate the cost of goods sold (COGS) and ending inventory, especially when prices of goods fluctuate over time.

Compare FIFO with other inventory valuation methods, such as LIFO (Last-In, First-Out) or Weighted Average Cost, to understand its unique characteristics and implications.

Apply the FIFO method in practice by organizing inventory records chronologically and ensuring that the costs of the earliest items are assigned to COGS first, while the remaining inventory reflects the most recent purchases.