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Introduction to Periodic and Perpetual Inventory
What is Inventory? Inventory is an asset account composed of items a company is planning to sell to customers. In financial accounting, we deal primarily with merchandising companies. A merchandiser is
Learn MoreInventory: Returns and Allowances
What Is a Return? A return occurs when inventory is purchased and later returned to the seller. When this happens, the purchaser no longer has the merchandise. This transaction has an effect on inventory
Learn MoreInventory: Discounts
What Is a Discount? We all love discounts, but why would a business offer offer a discount on their products? Typically, a business might offer a discount to increase sales, make an unhappy customer happy
Learn MoreCalculating Inventory Cost
Calculating Inventory Cost Inventory costs are constantly changing. Companies must decide how inventory costs will be calculated for the purposes of expensing that inventory when it is sold. There are
Learn MoreFirst-In, First-Out Inventory (FIFO Inventory)
Calculating Cost Using First-In, First-Out (FIFO Method) The First-In, First-Out method, also called the FIFO method, is the most straight-forward of all the methods. When determining the cost of a sale,
Learn MoreLast-In, First-Out (LIFO) Inventory Calculations
Last-in, first-out (LIFO) is an inventory method popular with companies that experience frequent increases in the cost of their product. LIFO is used primarily by oil companies and supermarkets, because
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