In this video you’ll learn how the FIFO (first in, first out) inventory cost assumption works. The FIFO method assumes that the oldest products in a company’s inventory have been sold first. We’ll practice using an example to illustrate how FIFO is used to calculate cost of good sold (COGS) and ending inventory. We’ll also compare FIFO with the LIFO method so we can understand the difference between these calculations.

Timestamps

• 00:00 The FIFO Inventory Method
• 01:34 Why Inventory Cost Assumptions Are Used
• 02:39 The FIFO Inventory Principle Explained
• 03:02 Accounting With FIFO - An Example
• 04:21 Comparison With LIFO Inventory Method
• 05:08 Advantages of FIFO
• 06:09 Calculating Closing Inventory with FIFO
• 07:28 Wrap Up

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