Accounting Lecture 08 Part I - LIFO, FIFO & Average Cost

[lauriewilliams0322]

So, will the average cost just always be half of the total cost?

[AccountingTutor]

@lauriewilliams0322

Only if there are an equal number of units purchased each time. The video explains that a =weighted= average cost must be determined. If I have 100 units at $2 and 900 units at $1, the average cost per unit is not $1.50. It is instead $1.10...

[ptboy18]

thank you for posting =] I was not connecting the dots that cost of inventory at hand was also known as beginning inventory of the next month.

[adelle0001]

thanks!

[pjtv24]

gonna watch this and go take me quiz on this and ill let you know how i do

[shexiav]

In any case, thanks for the mini-lecture which i believed helped many understand the subject matter better! Thanks!

[shexiav]

Average cost is $6.33 instead of $6.66 no?

[abearbodies]

thank you

[Trancaholic07]

really confusing! he went through it fast

[christineonthecoast]

I LOVE YOU SO MUCH.

[llrond]

If you're a sole proprietorship or partnership, why would you want to use LIFO to inflate income and pay more tax..

[llrond]

@llrond i mean FIFO

[AccountingTutor]

@llrond

You're correct - you wouldn't want to use FIFO and inflate your income, unless you were having a down year and needed to play accounting games in order to make things look better. Remember, though, the principle of consistency applies. If you change from LIFO to FIFO, you'll have to explain why and provide the LIFO AND FIFO numbers in your reports...