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    zaim1's Avatar
    zaim1 Posts: 1, Reputation: 1
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    #1

    Mar 8, 2010, 12:31 PM
    Which is better weighted average cost or FIFO
    Which is preferable formula between weighted average because or FIFO with regard to cash flow assumptions
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Mar 8, 2010, 05:31 PM

    I personally would prefer the former.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Mar 12, 2010, 12:12 AM

    Well, as you can see, there's a bit of preference involved in that, not to mention circumstances.

    If this was a homework question, it's either stupid of the instructor to make you believe that one method is better than another method, because there's too many things involved in that decision. That is the entire reason why more than one method exists!! Or, you were expected to say your own opinion of the matter, in which case you need to come up with your own opinion not someone else's. How are you going to explain your opinion if you don't have one?

    On the other hand, if you were just curious, someone could go into a long dissertation about what the different methods mean.

    You mentioned the word "formula" -- if you literally meant that, I find most students think average is the easiest to do. But that doesn't make it the "best" method.

    I personally am a FIFO person. I understand the other opinions - I just don't agree with them.
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