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    12345sti's Avatar
    12345sti Posts: 1, Reputation: 1
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    Oct 27, 2014, 04:23 PM
    The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under
    The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

    I am doing an accounting question and I am confused as to what this means?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    Oct 27, 2014, 04:47 PM
    FIFO is first in first out meaning the value is based on the most recent deliveries still in inventory. Average is the average cost of all the units in stock and LIFO is last in first out meaning the value is based on the oldest deliveries in inventory

    Inventory valuations affect Gross Profit and so various methods are used according to assumptions on the impact of taxation and the manner in which inventory is managed
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