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product, expensed when item is sold. Most accurate, most costly and cumbersome to track,
mainly used for unique items.
First-In, First-Out (FIFO): Assumes first goods purchased (first ones in) are first goods that are
sold. The most recent purchases would be what is left in ending inventory.
Last-In, First-Out (LIFO): Assumes most recent goods purchased (last ones in) are the first goods
to be sold. The earlier inventory purchases would be what is left in ending inventory.
• Weighted Average: Uses the weighted average unit cost of the goods available for sale to figure
out cost of goods sold and the balance in ending inventory.
Comparison using FIFO vs. LIFO: Assume the following data:
5 units at $5 each = $25
Assume: Sold 6 units at $10 sales price
+5 units at $7 each = $35
Cost of Goods Available
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This note was uploaded on 01/22/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida - Tampa.
- Spring '08
- Financial Accounting