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

When a food worker is storing milk cartons in the refrigerator according to the FIFO (First-In, First-Out) inventory method, which of the following actions should they take?

Place newer milk cartons in front of older ones so that newer cartons are used first.

Mix all milk cartons together regardless of their purchase date.

Remove all older milk cartons and only store the newest ones.

Place newer milk cartons behind older ones so that older cartons are used first.

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Verified step by step guidance

Understand the FIFO (First-In, First-Out) inventory method: FIFO is an inventory management technique where the oldest inventory items (those purchased or produced first) are used or sold before newer inventory items.

Identify the goal of FIFO in the context of perishable goods like milk: The purpose is to ensure that older items are used first to minimize waste and prevent spoilage.

Analyze the options provided in the problem: Evaluate each action to determine which aligns with the FIFO method. For example, placing newer milk cartons in front of older ones contradicts FIFO, as it would result in older cartons being used last.

Determine the correct action: According to FIFO, newer milk cartons should be placed behind older ones in the refrigerator. This ensures that older cartons are accessed and used first.

Apply the FIFO principle in practice: When storing milk cartons, always organize them by purchase date, placing the oldest cartons in front and the newest ones behind to maintain proper inventory flow.