FIFO Inventory Costing Method Tutorial

The video tutorial explains the FIFO method for inventory costing, highlighting its similarities with other methods. It covers the calculation of sales revenue, cost of goods sold (COGS), and gross profit using FIFO. The tutorial provides a detailed walkthrough of journal entries and ending inventory calculations, emphasizing the straightforward nature of FIFO. The instructor concludes with feedback on student preferences for inventory costing methods.

What remains unchanged in the journal entries when using different inventory costing methods?

• The sales revenue entry

• The cost of goods sold entry

• The ending inventory calculation

• The initial journal entries for inventory purchase

How is the sales revenue calculated in the FIFO method?

• By adding the cost of goods sold to the gross profit

• By multiplying the number of units sold by the selling price

• By multiplying the number of units sold by the cost price

• By subtracting the ending inventory from the total sales

In the FIFO method, from where do you start expensing the sold units?

• From the middle of the inventory

• From the beginning inventory

• From the highest cost inventory

• From the most recent purchase

What is the formula for calculating gross profit?

• Ending inventory minus cost of goods sold

• Sales revenue minus cost of goods sold

• Cost of goods sold minus sales revenue

• Sales revenue minus ending inventory

How is the ending inventory determined in the FIFO method?

• By using the cost of the units sold

• By using the cost of the first units purchased

• By averaging the cost of all units

• By using the cost of the last units purchased