Inventory Costing
When it comes to inventory cost there are three simple ways of using it. They are FIFO, LIFO, and weighed average.
FIFO: which stands for "first-in-first-out," is an inventory costing method which assumes that the first items placed in inventory are the first sold.
here is a simple way to understand it a little more. http://biztaxlaw.about.com/od/glossaryf/g/fifo.htm
LIFO: stands for last-in, first-out, meaning that the most recently produced items are recorded as sold first.
FIFO and LIFO Methods are accounting techniques used in managing inventory and financial matters involving the amount of money a company as tied up within inventory of produced goods, raw materials, parts, components, or feed stocks.
Weighed average: When using the weighted average method, you divide the cost of goods available for sale by the number of units available for sale, which yields the weighted-average cost per unit. In this calculation, the cost of goods available for sale is the sum of beginning inventory and net purchases.
FIFO: which stands for "first-in-first-out," is an inventory costing method which assumes that the first items placed in inventory are the first sold.
here is a simple way to understand it a little more. http://biztaxlaw.about.com/od/glossaryf/g/fifo.htm
LIFO: stands for last-in, first-out, meaning that the most recently produced items are recorded as sold first.
FIFO and LIFO Methods are accounting techniques used in managing inventory and financial matters involving the amount of money a company as tied up within inventory of produced goods, raw materials, parts, components, or feed stocks.
Weighed average: When using the weighted average method, you divide the cost of goods available for sale by the number of units available for sale, which yields the weighted-average cost per unit. In this calculation, the cost of goods available for sale is the sum of beginning inventory and net purchases.