Unit 6: Accounting for Inventory – Measuring and Reporting
Many businesses have to buy merchandise for their end-users to conduct their daily activities. There are a number of ways to account for the purchasing and integration of this merchandise within a business, and the decision on how a business will account for this rests on a number of factors. This unit introduces the inventory valuation concepts FIFO (First in First Out), LIFO (Last in First Out), and the weighted average. Choosing an inventory valuation method is a major decision a merchandising business entity will have to make before the merchandise is purchased. It also dictates the valuation of the merchandise on hand within the business. Understanding how inventory valuation method choice impacts the reported financial results is also important in analyzing financial statements.
Completing this unit should take you approximately 10 hours.
6.1: Introduction to Inventories and the Classified Income Statement
6.2: Measuring and Reporting Inventories
Unit 6 Practice