FIFO Flashcards
How is an inventory gain recorded under FIFO?
Is valued referring to the most recent (latest) price in the IN column
How in an inventory loss recorded under FIFO?
FIFO is used, that is the oldest cost price is the left first
Why is an inventory gain under FIFO valued using the most recent price in the IN column?
It is logical to assume that any extra inventory were most likely delivered in the last “batch” delivered
How does the inventory gain valuation using FIFO ensure faithful representation?
It reflects the most recent cost price - likely to be more accurate and less subject to bias
How are sale returns valued under FIFO (Inventory coming in)?
The cost of each inventory item will be calculated by using the latest cost price shown in the OUT column of the inventory card (unless otherwise stated)
