In this lesson, dive into the world of cost flow assumptions with Nick Palazzolo, CPA, who navigates you through the different methods used in accounting to track inventory costs. By exploring specific identification, LIFO (Last-In, First-Out), and weighted average, Nick highlights that these cost flow methods don't have to align with the actual physical movement of products. He brings clarity to common confusions, such as the difference between periodic and perpetual systems, and explains valuable nuances like understanding that a moving average is essentially a perpetual version of the weighted average. This clear explanation ensures that periodic income is accurately reflected on the income statement, a critical aspect of financial reporting.
Lesson: Cost Flow Methods
In this lesson, dive into the world of cost flow assumptions with Nick Palazzolo, CPA, who navigates you through the different methods used in accounting to track inventory costs. By exploring specific identification, LIFO (Last-In, First-Out), and weighted average, Nick highlights that these cost flow methods don't have to align with the actual physical movement of products. He brings clarity to common confusions, such as the difference between periodic and perpetual systems, and explains valuable nuances like understanding that a moving average is essentially a perpetual version of the weighted average. This clear explanation ensures that periodic income is accurately reflected on the income statement, a critical aspect of financial reporting.
Updated: Oct. 20, 2021 Create an account