 Welcome to Unit 5 of Sailor.org's Introduction to Financial Accounting. This unit has five subunits and will take about three hours to complete. Have you ever gone into a store only to be told that it does not have the item you were looking for in stock? That's always fun, isn't it? You might have felt frustrated and wondered how does a company be out of stock of something, or how does it decide how many units to have in stock at a given time? Well, this unit will take a look at these inventory issues. Both manufacturing firms, or companies that make products from raw materials and merchandising firms, or companies that sell a finished product, like a grocery store or a clothing store, have to keep an inventory of their goods and they do so in different ways. Large companies like Walmart have instant inventory tracking called just-in-time tracking, where inventory is managed at the cashier level, and inventory levels are kept in real time. You'll learn more about this model and its merits in this unit. As you complete this unit, be sure to pay close attention to the different ways in which inventory can be reported. Should companies use the last batch of materials bought, commonly referred to as the LIFO convention method, or use the first batch of materials bought, commonly called the FIFO method? You'll think about this question quite a bit in this unit. Inventory should be a relatively straightforward concept, but don't be discouraged if you find the FIFO and LIFO concepts to be challenging. There are subtle differences between the two concepts and we'll work on this. This unit will give you plenty of practice problems and excellent video lectures to help you master these concepts. You're now halfway through the course. Congratulations! We know you're gaining valuable knowledge and insight into the world of financial accounting.