In this lesson, Nick Palazzolo, CPA, dives into the moving average method for inventory valuation, emphasizing its dynamic nature compared to the weighted average. He clarifies that by recalculating the weighted average cost after each inventory purchase, this approach stays current with market prices and reflects a more immediate view of inventory costs. Nick walks through a detailed example, demonstrating the process of computing the moving average after various sales transactions. He meticulously breaks down each step to show how to calculate the costs of goods sold and the ending inventory balance, providing a compelling visualization and step-by-step narration that simplifies this complex accounting task.
Lesson: Example of Moving Average Valuation
In this lesson, Nick Palazzolo, CPA, dives into the moving average method for inventory valuation, emphasizing its dynamic nature compared to the weighted average. He clarifies that by recalculating the weighted average cost after each inventory purchase, this approach stays current with market prices and reflects a more immediate view of inventory costs. Nick walks through a detailed example, demonstrating the process of computing the moving average after various sales transactions. He meticulously breaks down each step to show how to calculate the costs of goods sold and the ending inventory balance, providing a compelling visualization and step-by-step narration that simplifies this complex accounting task.
Updated: Oct. 20, 2021 Create an account