FIFO and LIFO Inventory Management

The video tutorial explains the FIFO (First In First Out) and LIFO (Last In First Out) methods of inventory cost accounting. It uses a hypothetical company, Toy Giraffe Inc, to illustrate how these methods affect the Cost Of Goods Sold and Gross Profit. The tutorial provides a detailed walkthrough of inventory transactions over three months, comparing the outcomes of FIFO and LIFO. It concludes with a summary of the differences in inventory valuation and financial results between the two methods.

What does FIFO stand for in inventory accounting?

• First In First Out

• Fast In Fast Out

• First In Last Out

• First Inventory First Out

In which month did Toy Giraffe Inc. purchase 200 units at $6 per unit?

• March

• April

• February

• January

Under FIFO, which inventory is assumed to be sold first?

• Least expensive inventory

• Oldest inventory

• Newest inventory

• Most expensive inventory

How many units were sold in April?

• 200 units

• 150 units

• 100 units

• 50 units

What was the average cost per unit under FIFO at the end of April?

• $5.86

• $6.00

• $6.14

• $7.00

What was the Gross Profit for May under LIFO?

• $350

• $550

• $250

• $450

How many units were in the ending inventory at the end of May under FIFO?

• 100 units

• 350 units

• 150 units

• 250 units

What was the total Cost Of Goods Sold for June under FIFO?

• $1450

• $1350

• $1250

• $1150

Under LIFO, what was the ending inventory value at the end of June?

• $350

• $250

• $450

• $550

Which method resulted in a higher Gross Profit in the earlier periods of Q2?

• Neither

• Both were equal

• LIFO

• FIFO