Last In First Out (LIFO) Inventory Method - Accounting

The video tutorial explains the Last In, First Out (LIFO) inventory method, highlighting its cost flow assumption where the most recent purchases are the first to be expensed. It contrasts LIFO with FIFO and introduces the FISH concept. A practical example using Delta Company illustrates how LIFO is applied, emphasizing the conceptual understanding of cost flow over physical inventory movement.

What does LIFO stand for in inventory management?

• Last In, First Out

• Last In, First In

• First In, First Out

• First In, Last Out

In LIFO, which inventory is sold first?

• The cheapest inventory

• The most recent inventory

• The most expensive inventory

• The oldest inventory

What does the acronym FISH stand for in the context of LIFO?

• First In, Stocked Here

• First In, Stored Here

• First In, Sold Here

• First In, Still Here

How does LIFO affect the cost of goods sold (COGS)?

• It uses the cost of the oldest inventory

• It uses the cost of the most recent inventory

• It averages the cost of all inventory

• It uses the cost of the cheapest inventory

In the Delta Company example, which date's inventory is used first under LIFO?

• April 15th

• October 13th

• December 31st

• January 1st