From the course: Finance and Accounting Tips

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LIFO, FIFO, and FISH

LIFO, FIFO, and FISH

From the course: Finance and Accounting Tips

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LIFO, FIFO, and FISH

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- Let's talk inventory. - Okay, tell me what it is. - Inventory is the name given to goods that are either manufactured or purchased for resale in the normal course of business. A car dealer's inventory is automobiles. A grocery store's inventory is vegetables, meats, dairy products, canned goods, bakery items. Sears' inventory is comprised of shirts, Kenmore appliances, DieHard batteries and more. - And like other items of value, such as cash or equipment, inventory's classified as an asset and is reported on a company's Balance Sheet. - When products are sold, they are no longer assets. The cost to purchase or manufacture the products must be removed from the asset classification, removed from inventory on the Balance Sheet, and reported on the Income Statement as an expense, Cost of Goods Sold. - Now, if you hang around accountants or Financial Statements very much, and the discussion turns to inventory, you'll start to hear terms like LIFO and FIFO. These are inventory methods…

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