how-would-you-explain-the-differences-between-fifo-lifo-and-average-cost-to-a-ne

Question

How would you explain the differences between FIFO, LIFO, and average cost to a new accounting intern?

Accepted Answer

FIFO sells oldest inventory first, LIFO sells newest, and average cost averages all costs.

Answer

FIFO sells newest inventory first, LIFO sells oldest, and average cost uses the median cost.

Answer

FIFO and LIFO are the same, average cost uses the lowest cost.

Answer

FIFO and LIFO both sell inventory randomly, average cost uses the highest cost.