Last In First Out (LIFO) | Inventory Cost Flows
VloĆŸit
- Äas pĆidĂĄn 6. 08. 2024
- đ„Inventory Cost Flow Assumptions Cheat Sheet â accountingstuff.com/shop
In this video you'll learn about Inventory Cost Flow Assumptions. There are three of these:
âȘ FIFO - First In First Out
âȘ LIFO - Last In First Out
âȘ AVCO - Weighted Average Cost Method
This accounting tutorial focusses on LIFO. You'll discover how the Last In First Out method works and get to practice using it with an example. This episode is part of a mini-series exploring Inventory in Accounting. You can find the link to the whole playlist here âŹïž
đFull Inventory Playlist â âą Accounting for INVENTO...
đŽSubscribe for more Accounting Tutorials â geni.us/subtothechannel
â±ïžTIMESTAMPS
00:00 - Intro
00:48 - What is the Inventory Calculation?
01:04 - What do Inventory Cost Flow Assumptions do?
01:26 - What are Inventory Cost Flow Assumptions?
01:38 - The three assumptions: FIFO, LIFO and AVCO
01:50 - How LIFO works (Last In First Out)
02:01 - Accounting with LIFO - Example
02:57 - Step 1: Draw an Inventory Cost Flow Table
03:10 - Step 2: Enter what you know
04:32 - Step 3: Fill in the blanks
06:52 - Step 4: Cost of Goods Sold and Closing Inventory
07:30 - Advantage of LIFO
07:44 - Disadvantage of LIFO
08:01 - FIFO vs LIFO vs AVCO
đ CLOUD ACCOUNTING SOFTWARE
âȘ QuickBooks Online USA (FREE TRIAL/DISCOUNT) â geni.us/jA9N
âȘ QuickBooks Online Canada (FREE TRIAL/DISCOUNT) â geni.us/bNN7
âȘ Xero (FREE TRIAL) â xeroamericas.grsm.io/ck90eoq1...
đFAQ
âȘ My Favourite Accounting Book for Beginners â geni.us/5mKR7m
đ¶FOLLOW ME ON
âȘ Instagram â / accountingstuff
âȘ TikTok â / accounting_stuff
âȘ Facebook â / thisisaccountingstuff
đŹLEARN ACCOUNTING BASICS FOR FREE
âȘ The Full Playlist â âą ACCOUNTING BASICS for ...
________________________
DISCLAIMER
Some of the links above are affiliate links, where I earn a small commission if you click on the link and purchase an item. You are not obligated to do so, but it does help fund these videos in hopes of bringing value to you!
________________________
#accounting #accountingbasics #accountingstuff
You can find the FIFO and AVCO videos in the Inventory Playlist (link in the vid description).
â±ïžTIMESTAMPS
00:00 - Intro
00:48 - What is the Inventory Calculation?
01:04 - What do Inventory Cost Flow Assumptions do?
01:26 - What are Inventory Cost Flow Assumptions?
01:38 - The three assumptions: FIFO, LIFO and AVCO
01:50 - How LIFO works (Last In First Out)
02:01 - Accounting with LIFO - Example
02:57 - Step 1: Draw an Inventory Cost Flow Table
03:10 - Step 2: Enter what you know
04:32 - Step 3: Fill in the blanks
06:52 - Step 4: Cost of Goods Sold and Closing Inventory
07:30 - Advantage of LIFO
07:44 - Disadvantage of LIFO
08:01 - FIFO vs LIFO vs AVCO
These video have taught me far more about accounting in far less time than my college courses. Much appreciated!! fantastic content
Glad to hear the vids are helping. All the best!
Knowing that so many students are learning more in James's videos than their accounting courses really makes me believe if I master these concepts in these videos, despite being confused in my current program, that I can be successful! Thank you for the content!
Had my Accounting final a few hours ago. Just want to thank you James for all your videos! Exam went really well!! you're an absolute legend mate
Congrats Jon! Must be a weight off your chest getting through it. All the best
i learnt everything about Inventory in less than an hour while my teacher couldn't do even half of it in 3 sessions. YOU ARE A GOD
Hope it's making sense :)
I'm almost 60 yr old, and recently hired as a controller. I had a mediocre accounting background. Your videos are likely to help save my job!!! Thank you!!!!
Good luck! I hope it works out well for you
Love You Brother For these efforts you made for us.
Really Appreciate That.
Love From Pakistan đșđș
Cheers Usman, it's a pleasure. Love from Canada!
Having my final in like 30 minutes, this works a lot better than an exce sheet losely explaining all of this.
I was a bit fuzzy on the details but this has really helped actually, thanks!
Thank you so much! Your videos are always well put together and helpful.
I can't believe how easy this method is! That goes for FIFO and AVCO too, my college course totally confused me and took far longer explaining it!!! Thank you so so much, greatly appreciated:)
Great to hear it's making sense! All the best :)
Am happy to discover this because I didn't do Cost Accounting but you have made it easy for me to understand.
THANK YOU THANK YOU THANK YOU! I was so confused as to what âlast inventoryâ and âfirst inventoryâ meant, thanks again!
You're very welcome, great to hear it's making sense :)
I first encountered your Channel when you had 500 subs ! And now look at that! Soon surpassing 50k. Congrats ur crushing it
Hey there, thanks for dropping in again! Yeah things have been moving quicker lately. Cheers for the support
This really helps me for studying accounting in my undergrad. Your videos are a life saver!!!
dude please do not stop making videos, all the info you give is very useful for reinforcing what im seeing in my classes.
Cheers Luis, I plan to make many more :)
I just wanna say that I like the way you impart the knowledge. It is just so engaging. Anyway, thanks a lot for helping me out with accounting. I really struggled without your videos ...
No problem, great to hear you're finding these useful!
Much thank you to this and the FIFO video. I was very confused how the online course I'm taking was getting the answer and this finally made me understand.
No worries Emily, great to hear it's making sense
Really looking forward for AVCO video, LIFO and FIFO was great!!
Cheers Cansu, the AVCO vid is now live
one of the best explanations of FIFO i have ever seen
Thanks Ilkin!
Thank you for sharing, please continue to upload. Superb content đ
Thanks Brianna! There's plenty more to come
Thank you so much honestly you make it easy to understand
Cheers, that's great to hear!
Yass, my final is in next month but I really do like your videos so I'm watching it now. Thank you for great videos ^-^ .
Ouch, so you'll have to revise over the Christmas holidays!
Got it,ty.đ
Amazing video James, as always! I just wanted to comment that one of your videos really brought back my desire to study Accounting ( the one with the DEALER method ). Now my Accounting exam is in exactly 1 week, but I feel much more confident after watching your videos!
I'm so happy that I'm not one of those people who let debiting and crediting make them give up on Accounting đ and it's only thanks to you!
Cheers Melek, great to hear that you've rediscovered the motivation to study. Good luck in your exam, I hope it goes well!
Great tutorial, thanks for sharing
Cheers Michael!
This mini-series is excellent
Thanks Georgie!
Hi James. I really love your videos. They're really helpful. I hope you can make a video on analytical petty cash book and
the imprest system in the future. I'm looking forward to it. Thanks
Hey Jackie, thanks for your suggestions! I'll keep those topics in mind for the future
Thank you so much for this helpful video along with your other videos that are helping me a lot as a new accounting student. But I have 1 question and my final is tomorrow so hope u can help me. In LIFO should I record the beginning inventory or not? if yes then when should I record it and when I shouldn't.
Greatđ„
Thanks Amal :)
Great video as usual James! Thanks for continually sharing your knowledge!
I hope you can also do a video next time on BRANCH Accounting. What it is and how it is done correctly. Is this the accounting method used if you have multiple branches/locations? Also maybe a video on how to do BUDGETING, how to create a budget plan for a business. Really appreciate your work! Thanks again!
Great suggestions - cheers Steve!
Very clear and helpful video as always but I wish the example was different to solve as an exercise- not only to understand the topic. Thanks!
Thanks for your feedback, I'll bear that in mind for future vids
woww Fantastic content, im seeying all your videos
Thanks Sabrina, glad you enjoyed it!
You are awesome đđœ
Thanks Kanza!
I would greatly appreciate it if you made a video about dollar value LIFO. I am a new subscriber and I found your channel through my recommendations. I am currently studying for the FAR section of the CPA Exam and your videos have been very helpful!
Thanks for your suggestion!
I just checked online... GAAP allows LIFO. Neat.
thank u
keep going brother . u do better than my lect .
Thanks, will do!
I really appreciate you đ you are perfect
Thanks for your kind words :)
This serie of videos about the inventory cost may save my ass for my exam of tomorrow so thanks a lot. A recommendation for future a future video: How a company issue shares/ different types of shares ;)
Hey Gaspard, good luck in your exam!! Cheers for the suggestion
You're so good, i love u so much :) thanx for lecture
Cheers Elif, glad your enjoying the vids!
I love the squeegees example. So fun saying it. lolll
Thanks for your work)
Please, make a video about calculating operating, investing and financing activities)
Hey do you mean Cash Flow Statements? I've got a playlist on them here... czcams.com/play/PL5zKSeS09l314wQmOtPEIaYnCGlLPUNIh.html
greetings from Maastricht, Netherlands
Still can't get how could someone dislike this
it helps me a lottt a lottt thank you!! i hope u will do a video on tangible non current assets eg depreciation and all that. thank you in advance :)
Thanks, I plan to cover depreciation fairly soon
I love this man #NoHomo
Haha cheers Lucas!
Would your opening balance cost per unit still be $2 in the next accounting period? If that's the case then will it be $2 forever until you sell all of your inventory?
Is lifo used in periodic or perpetual method or can it be used in both
Hey James Great video ! thank you i learned a lot
Great suggestion!
Great videos dude it helps alot even tho i haven't found an easier way for me to remember this,,I really wanted to know where did you get the 100 units from when you said
1200+100x2 đ€đ€đ€
You have to take 100 units from existing stock to account for the 500 units sold. Those 100 units cost $2 each. Thus the $200 + $1200 = $1400 this gives you the cost of goods
@@bajoobiecuzican thank you for your reply this is where I get confused I appreciate it đ
Great video! Is it possible you will make some videos for Cost Accounting Analysis?
Cheers for your suggestion!
The handsome accounting man ;)
Not only handsome, but also funny and clever (:
James, could you help me, please? đ
I am struggling to understand the best method to use for this particular question:
"Suppose a company bases its evaluation of the purchasing officer for a refinery on the gross margin on the oil products produced and sold during the year. During the year, the price of a barrel of oil increased from 80 to 90 dollars. The value of the inventory of oil at the beginning of the year is 80 dollars or less per barrel. On the last day of the year, the purchasing agent is contemplating the purchase of additional oil at 0USD per barrel. Is the agent more likely to purchase additional oil if the company uses the FIFO or LIFO method for its inventories? Explain."
I appreciate your kindness. Thank you đ
Can you please make a video explaining the difference between GL accounting and auditing and any career tips for each? Right now I am a GL accountant for a consulting firm but I want to know if I should make a switch to auditing and if I have the skills to do so.
PS. My eventual goal is to be a CFO but I donât know if moving to audit will take me off track.
Thanks for the suggestion, I would like to make some more career-orientated vids in the near future. Moving to Audit could help speed things up for you significantly
Do you know how incredible you are? I second the comment that you are a god!
Thanks for your kind words :)
Why is LIFO not allowed by the IFRS?
James please explain the difference between AVCo and weighted average cost in your videos
Hey Mujahid, the Weighted Average Cost Method (WAVCO) and the Average Cost Method (AVCO) are the same thing. We'll cover it in the next video
Please can you make a video of final account of a sole trader... less I forget thanks a lot for your #lectures... I really appreciate đ
Thanks for your suggestion!
@@AccountingStuff anytime đ
But what if we have more than three purchases ? Which should we choose
It would be helpful to put a rug or sound sheets in your studio to make for cleaner audio
Thanks for your suggestion Grant :)
You could also make videos on accounting frauds and mistake. Like show the other side of the world and how it is misused or manipulated.
Hey Akshay, that would be a really interesting series. Thanks for your suggestion!
@@AccountingStuff Yeah and you know just to also be on the safe side, you can do on companies that have already shut down or closed. So you wont get any messages or notice from companies that you are shading them.
For example, you can show how Enron manipulated their books. A company that has shut down.
Now you might ask like why do on old companies or even older like some long forgotten companies, its because "Those who do not learn History are doomed to repeat it."
There are countless ways a company has manipulated their books and so much so has been done under the sun. Would be a adventure to see how they did so, plus love learning more.
(Yup i blame you for my interest in accounts man.....)
Take care, have a great day.
@@AkshayKumar-yn3lj Yeah good call. Have you watched the documentary "Smartest Guys in the Room"? So interesting!
In rising trends of prices, the LIFO method of cost flow assumption leads to higher cost of goods sold...WHY?
Question 2: the lesser COGS yields mor gross profit and gross profit margin and eventually it result in HIGHER net income ...WHY?
LIFO as a valuation model is also not allowed under ASPE.
đ
Thanks buddy :)
What is the difference between AVCo And weighted average cost
None at all, they are the same method
PLZ UPLOAD THE AVCO VID MY EXAM IS TMRW!!!!
Hey! Unfortunately it won't be up until next week. Good luck! Hope you ace it
8:36
Thala gethu thala
Where did 2,750 revenue came from? I am confuse. Anyone help
The $2,750 revenue came from the November 12th transaction of selling 500 squeegees.
how did he get 100 times 2 dollars per unit?
Sir your revenue is 2750 how it happen explain me thanks teacher
Hey Tabinta, sure thing! You sold 500 units for $5.50 each. 500 x $5.50 = $2,750
@@AccountingStuff i understood thanks sir
@@AccountingStuff and my exam went well đȘđȘ you are the best teacher đȘđȘâ€â€ love from somaliađžđŽđžđŽ
@@abdirisakabdimahadahmed1536 Nice one, glad to hear it went well!!
Ledgend says its impossible to get heartđ from JAMES
BY THE WAY GOOD VIDEO AND YOU GOT A FRESH SUB YESTERDAY ONLY
Cheers Rohini, it's great to have you on board :)
but... if this method is forbidden by the IFRS... why does some people uses it?
Because not everyone has to follow IFRS, and LIFO brings with it some potential tax advantages
Don't use LIFO if you're required to fill under IASB.
Very true
Dude you sound like the guy from the true crime podcast
Haha, that's a first!
Accounting Stuff open.spotify.com/episode/7i89EGSDPsuSj5TWCPI4EM?si=h1h2P-EVThODCzOxBKsTxw same person
So hard
You've got this!
you're having too much fun saying it... squidgeez
It's a great word!
Em I the only one who dont like brit accents when watching informative youtube vids? shit makes me mad lol
Damn those Brits ;)
thank youu