{"id":24346,"date":"2025-08-13T17:37:21","date_gmt":"2025-08-13T17:37:21","guid":{"rendered":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/"},"modified":"2025-08-14T10:59:42","modified_gmt":"2025-08-14T10:59:42","slug":"lesson-5-last-in-first-out-lifo","status":"publish","type":"lesson","link":"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/","title":{"rendered":"Lesson 5: LAST-IN, FIRST-OUT (LIFO)"},"content":{"rendered":"
\n\t\t\t\t
\n\t\t
\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t

Lesson 5: Accounting for Merchandise inventory\n<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
\n\t\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t

LAST-IN, FIRST-OUT (LIFO)\n\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
(LIFO) method assumes that the latest goods purchased are the first to be sold. Accordingly, the costs of the latest goods purchased are the first to be recognized in determining cost of goods sold.<\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
Under LIFO, companies obtain the cost of the Ending inventory by taking the unit cost of the earliest goods available for sale and working forward until all units of inventory have been costed<\/span><\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
Companies also can calculate Cost of goods sold by pricing the 550 units sold using the prices of the last 550 units acquired<\/span><\/h5>
The cost of goods sold formula in a periodic system is (Beginning Inventory + Purchase) — Ending Inventory = Cost of Goods Sold<\/span><\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
Under a periodic inventory system, which we are using here, all goods purchased during the period are assumed to be available for the first sale, regardless of the date of purchase.<\/span><\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t

AVERAGE-COST :<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
The average-cost method allocates the cost of goods available for sale on the basis of the weighted-average unit cost incurred.<\/span><\/h5>

The company then applies the weighted-average unit cost to the units on hand to determine the cost of the Ending inventory<\/span><\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
We can verify the Cost of goods sold under this method by multiplying the units sold times the weighted-average unit cost (550 x $12 =$6,600). Note that this method does not use the average of the unit costs.<\/span>
Note:<\/span><\/h5>
That average is $11.50 ($10+$11+$12 +$13 = $46; $46 \/ 4). The average-cost method instead uses the average weighted by the quantities purchased at each unit cost<\/span><\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
In periods of changing prices, the cost flow assumption can have significant impacts both on income and on evaluations of income, such as the following:<\/h5>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n\t\t\t\t
\n\t\t\t\t\t\t\t
    \n\t\t\t\t\t\t\t
  • \n\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\tIn a period of inflation, FIFO produces a higher net income because lower unit costs of the first units purchased are matched against revenue.<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t
  • \n\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\tIn a period of inflation, LIFO produces a lower net income because higher unit costs of the last goods purchased are matched against revenue.<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t
  • \n\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\tIf prices are falling, the results from the use of FIFO and LIFO are reversed. FIFOwill report the lowest net income and LIFO the highest.<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t
  • \n\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/path><\/svg>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\tRegardless of whether prices are rising or falling, average-cost produces net income between FIFO and LIFO<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>","protected":false},"comment_status":"open","ping_status":"closed","template":"","class_list":["post-24346","lesson","type-lesson","status-publish","hentry"],"yoast_head":"\nLesson 5: LAST-IN, FIRST-OUT (LIFO) - Certifeka-edu<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 5: LAST-IN, FIRST-OUT (LIFO) - Certifeka-edu\" \/>\n<meta property=\"og:description\" content=\"Lesson 5: Accounting for Merchandise inventory LAST-IN, FIRST-OUT (LIFO) (LIFO) method assumes that the latest goods purchased are the first to be sold. Accordingly, the costs of the latest goods purchased are the first to be recognized in determining cost of goods sold. Under LIFO, companies obtain the cost of the Ending inventory by taking […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/\" \/>\n<meta property=\"og:site_name\" content=\"Certifeka-edu\" \/>\n<meta property=\"article:modified_time\" content=\"2025-08-14T10:59:42+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/04\/logos-png-01-296x57-1.png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"\u0648\u0642\u062a \u0627\u0644\u0642\u0631\u0627\u0621\u0629 \u0627\u0644\u0645\u064f\u0642\u062f\u0651\u0631\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 \u062f\u0642\u0627\u0626\u0642\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":[\"WebPage\",\"webpage\"],\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/\",\"url\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/\",\"name\":\"Lesson 5: LAST-IN, FIRST-OUT (LIFO) - Certifeka-edu\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/certifeka-edu.com\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/logos-png-01-296x57-1.png\",\"datePublished\":\"2025-08-13T17:37:21+00:00\",\"dateModified\":\"2025-08-14T10:59:42+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/#breadcrumb\"},\"inLanguage\":\"ar\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"ar\",\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/#primaryimage\",\"url\":\"https:\\\/\\\/certifeka-edu.com\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/logos-png-01-296x57-1.png\",\"contentUrl\":\"https:\\\/\\\/certifeka-edu.com\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/logos-png-01-296x57-1.png\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/programs\\\/finance-for-strategic-managers-accounting-professional-certificate\\\/lessons\\\/lesson-5-last-in-first-out-lifo\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"home\",\"item\":\"https:\\\/\\\/certifeka-edu.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Lessons\",\"item\":\"https:\\\/\\\/certifeka-edu.com\\\/lesson\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Lesson 5: LAST-IN, FIRST-OUT (LIFO)\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/#website\",\"url\":\"https:\\\/\\\/certifeka-edu.com\\\/\",\"name\":\"certifeka\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/certifeka-edu.com\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"ar\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/#organization\",\"name\":\"certifeka\",\"url\":\"https:\\\/\\\/certifeka-edu.com\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"ar\",\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/certifeka-edu.com\\\/wp-content\\\/uploads\\\/2025\\\/03\\\/cropped-certifeka-removebg-preview.png\",\"contentUrl\":\"https:\\\/\\\/certifeka-edu.com\\\/wp-content\\\/uploads\\\/2025\\\/03\\\/cropped-certifeka-removebg-preview.png\",\"width\":366,\"height\":104,\"caption\":\"certifeka\"},\"image\":{\"@id\":\"https:\\\/\\\/certifeka-edu.com\\\/#\\\/schema\\\/logo\\\/image\\\/\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Lesson 5: LAST-IN, FIRST-OUT (LIFO) - Certifeka-edu","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/","og_locale":"ar_AR","og_type":"article","og_title":"Lesson 5: LAST-IN, FIRST-OUT (LIFO) - Certifeka-edu","og_description":"Lesson 5: Accounting for Merchandise inventory LAST-IN, FIRST-OUT (LIFO) (LIFO) method assumes that the latest goods purchased are the first to be sold. Accordingly, the costs of the latest goods purchased are the first to be recognized in determining cost of goods sold. Under LIFO, companies obtain the cost of the Ending inventory by taking […]","og_url":"https:\/\/certifeka-edu.com\/ar\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/","og_site_name":"Certifeka-edu","article_modified_time":"2025-08-14T10:59:42+00:00","og_image":[{"url":"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/04\/logos-png-01-296x57-1.png","type":"","width":"","height":""}],"twitter_card":"summary_large_image","twitter_misc":{"\u0648\u0642\u062a \u0627\u0644\u0642\u0631\u0627\u0621\u0629 \u0627\u0644\u0645\u064f\u0642\u062f\u0651\u0631":"4 \u062f\u0642\u0627\u0626\u0642"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":["WebPage","webpage"],"@id":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/","url":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/","name":"Lesson 5: LAST-IN, FIRST-OUT (LIFO) - Certifeka-edu","isPartOf":{"@id":"https:\/\/certifeka-edu.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/#primaryimage"},"image":{"@id":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/#primaryimage"},"thumbnailUrl":"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/04\/logos-png-01-296x57-1.png","datePublished":"2025-08-13T17:37:21+00:00","dateModified":"2025-08-14T10:59:42+00:00","breadcrumb":{"@id":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/#breadcrumb"},"inLanguage":"ar","potentialAction":[{"@type":"ReadAction","target":["https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/"]}]},{"@type":"ImageObject","inLanguage":"ar","@id":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/#primaryimage","url":"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/04\/logos-png-01-296x57-1.png","contentUrl":"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/04\/logos-png-01-296x57-1.png"},{"@type":"BreadcrumbList","@id":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate\/lessons\/lesson-5-last-in-first-out-lifo\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"home","item":"https:\/\/certifeka-edu.com\/"},{"@type":"ListItem","position":2,"name":"Lessons","item":"https:\/\/certifeka-edu.com\/lesson\/"},{"@type":"ListItem","position":3,"name":"Lesson 5: LAST-IN, FIRST-OUT (LIFO)"}]},{"@type":"WebSite","@id":"https:\/\/certifeka-edu.com\/#website","url":"https:\/\/certifeka-edu.com\/","name":"certifeka","description":"","publisher":{"@id":"https:\/\/certifeka-edu.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/certifeka-edu.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"ar"},{"@type":"Organization","@id":"https:\/\/certifeka-edu.com\/#organization","name":"certifeka","url":"https:\/\/certifeka-edu.com\/","logo":{"@type":"ImageObject","inLanguage":"ar","@id":"https:\/\/certifeka-edu.com\/#\/schema\/logo\/image\/","url":"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/03\/cropped-certifeka-removebg-preview.png","contentUrl":"https:\/\/certifeka-edu.com\/wp-content\/uploads\/2025\/03\/cropped-certifeka-removebg-preview.png","width":366,"height":104,"caption":"certifeka"},"image":{"@id":"https:\/\/certifeka-edu.com\/#\/schema\/logo\/image\/"}}]}},"_links":{"self":[{"href":"https:\/\/certifeka-edu.com\/ar\/wp-json\/wp\/v2\/lesson\/24346","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/certifeka-edu.com\/ar\/wp-json\/wp\/v2\/lesson"}],"about":[{"href":"https:\/\/certifeka-edu.com\/ar\/wp-json\/wp\/v2\/types\/lesson"}],"replies":[{"embeddable":true,"href":"https:\/\/certifeka-edu.com\/ar\/wp-json\/wp\/v2\/comments?post=24346"}],"version-history":[{"count":0,"href":"https:\/\/certifeka-edu.com\/ar\/wp-json\/wp\/v2\/lesson\/24346\/revisions"}],"wp:attachment":[{"href":"https:\/\/certifeka-edu.com\/ar\/wp-json\/wp\/v2\/media?parent=24346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}