FIFO Inventory Accounting Method EXPLAINED | First In, First Out Inventory Cost Flow
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- เผยแพร่เมื่อ 4 มิ.ย. 2024
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In this video you'll learn how the FIFO (first in, first out) inventory cost assumption works. The FIFO method assumes that the oldest products in a company’s inventory have been sold first. We'll practice using an example to illustrate how FIFO is used to calculate cost of good sold (COGS) and ending inventory. We'll also compare FIFO with the LIFO method so we can understand the difference between these calculations.
00:00 The FIFO Inventory Method
01:34 Why Inventory Cost Assumptions Are Used
02:39 The FIFO Inventory Principle Explained
03:02 Accounting With FIFO - An Example
04:21 Comparison With LIFO Inventory Method
05:08 Advantages of FIFO
06:09 Calculating Closing Inventory with FIFO
07:28 Wrap Up
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#accounting #fifo #CostAccounting
I graduated in Commerce with Accounting and Statistics. How I wish the concepts could have been explained back then, like the way in this video! But better late than never! Nice work Leila! 😊👍 While this is FIFO, it's always LIFO for me! Leila In Fear Out! 😁
Haha, you're the best!
In the logistic scene we use FEFO as well. First Expired, First Out. This one is helpful when you're dealing with best before dates.
So mostly for the perishable food industry?
Thanks for the feedback, Tim!
Agree...we used FEFO for pharmacy
Indeed
Am I the only one who wants to watch this all over again? Oh and while we are here, how can we do this in excel?
Thanks Leila. Interesting concepts, even for non-accountants. Thanks for sharing :)) Thumbs up!!
As usual, you do a great job in teaching. Thanks.
So nice of you
Thank you for teaching powerful tools
Thanks for your work, when you explained all of more clear. Never stop make videos. You are great.
One of your best videos!
i would like to see how you would solve this fifo problem in excel with your magic ;)
Wow, Your way of teaching is just a click to mind !! all the best
Thx very much for this very good explanation of Fifo. I was not used to get an explanation in english so far 🤗.
Wonderful explanations..God bless you
Thank you
Hi Leila,
Once again your explanation was astonishing.
Please do a video, how to apply FIFO in excel and find cost of sale for each sales. It’s a nutshell for you. I am eagerly waiting........
Thanks.
Excellent explanation. Great refresher for an MBA. 5⭐'s for graphics also. They complete the majic Leila.
Thanks for that!
So important yet overlooked.
Thanks!
Thank You Leila for the explanation
Great video Leila! 🙌 Accounting & Inventory are inherently related. Definitely recommend using inventory mgmt softwares that integrate accounting to keep track of your revenue, COGS, profit, etc.
Perfect video thanks !
Well Explained, FIFO & LIFO is very clear..!!
Thanks Faraz!
Grazie mille Leila, ottima spiegazione
Prego :)
so.. how do you make this in excel, Leila?.. thx
thank you ,video is very well
Could you please make a video with examples using Excel ? For instance, how do we find out the cost basis of the latest inventory in a pile of data? or what would be the quantity left in the latest inventory.
Thanks !
I'll think about it. Thanks for your suggestion, Andy!
@@LeilaGharani Please Leila!! we need this videoo
Please Leila! you are the best i believe that you can help as always)
@@LeilaGharani
excellent
Great!
Thank you 👌
Thank You!!! Pretty Top Too, Suits You!
Nice show
Thank you so much for doing so well
It's my pleasure
@@LeilaGharani May allah bless you
Thank you
Hi, Leila, do you have a post that solve this FIFO issue by Excel?
Hello Leila, thanks for this theoretical explanation. I saw some of the reactions and they ask for an Excel solution. On youtube I found some, but they were quite long, so this is not so easy. But maybe PQ will be handy?
Thanks Leila. We use AVCO as we have too many skus and limited human resources to use FIFO or LIFO. I appreciate the video nonetheless.
Thanks for the feedback, Matt.
Hi Leila. Beautifully explained. However, how do use the same concept in maintaining the receivables from the customers. In case if there are 4 line items for an invoice and the customer pays partially. I need to assign the partially paid amount line item wise. For example, 4 line items has $500 each. The customer pays 1250. The balance to be paid column for the first and second line items has to be marked $0 and the third has to be $250 and the forth must be $500. Please help me.
your videos deserve more likes comments shares views
Kindly make a video on fifo method using excel and generate profit out of it. Love from Pakistan
In which funection in excel that can i use it to help me to calculate my inventory cost as fifo method type ?!
When I find your videos on functions it is my first priority to open and learn from >> I opened this video thinking that I would learn the functions to do this task>> Would love to see your magical way to solve this, I am working on value chain analysis system that starts from inbound logistics to outbound logistics>> the first block is the warehouse and inventory >> would love to see your solution for FIFO, it is really needed (Without Script Please) I found one solution using MIN and OFFset functions but it is not clear, yet it seems a good solution>> but still I am finding it hard to follow with the explanation
How cogs and ending inventory can be the same since cogs is purchase - ending inventory. Please explain the line you mentioned at 8:35
Bravo
Which presentation program did you use for this illustration ??
We use mainly Camtasia for video editing.
@@LeilaGharani thanx 4 replying... ☺️
Thanks for the details. Can you help us how do we knock off entries in excel in FIFO scenario
@@valver8362 we have system in place but wanted to do in excel for control check and checking of open documents 🙂
Hi there, is it possbile to make a video on FiFo planning based on expiration dates? I am having huge struggles with this on how to get it into Excel. If I'd be able to solve this issue, then this will help me a lot in my profession. Thanks!
Thank for sharing
Very useful knowledge
Any excel or Google sheet function 🤔?
Kind regards
Of course, but you would have to either manually enter your purchase history and cost, and utilize excel to pull data from your POS (point of sale) software, if possible. Each item would need a unique identifier (SKU) to match with the receipt when you purchased it.
I have a video request if this is even possible... Can I schedule RECURRING emails in Outlook? I have a few standing reminders I have to send every single month. I have saved quickparts, but it just seems like I should be able to schedule them and let Outlook do the work for me??
Nice. Is this part of a new series of videos about logistics? Hope you talk more about the supply chain world :)
No, sorry. I'm not an expert for logistics :)
But how do you do the inventory card in accounting
Nice overview, could you do one on Average cost as well please
With Average costs method you just find the Average costs pr. unit and use that average to multiply sales numbers.
@@christinakloster1498 How do you think you would calculate is historically?
@@simonhall886 you would need to add all purged materials from the given periods and then divide that number with the number of total periods. This gives you the average number of both units and prices.
I found this video for you. It's the best one I have jet to come across here on YT.
th-cam.com/video/OFKMk93yLn8/w-d-xo.html
it will be interesting to have inventory management in excel class please with automated\custom print out without the use of VBA
hi Ms. Leila Gharani ...
i have a problem with our File .. Could you PLEASE help me Please please please😢
this is the situation
in Column A sheet1
there's a Book codes (Ex: HG10, AB34, RD75)
in Column B Sheet1
there's a Formula
Sumifs(Sheet2!AB:AB,Sheet2!$AA:$AA,$A2)
(there's also a Formula in Sheet 1 Column C - E)
so when i copy paste the formula From Sheet 1 Column B - E
to Column F-I
The range in Formula from Column B Sumifs(Sheet2!AB:AB,Sheet2!$AA:$AA,$A2) will be automatically adjusted into Sumifs(Sheet2!AF:AF,Sheet2!$AA:$AA,$A2) Column F but our requirement is Sumifs(Sheet2!AC:AC,Sheet2!$AA:$AA,$A2)
the Range must move only one Column even though i copy paste it into 2 or more than 2 Columns... this is just an Example because there's a lot of formulas that we created and same problem, we need the Range in formulas will adjusted moved 1 Column when we copy paste it into 2 or more than 2 columns...
PLEASE HELP ME Leila .. could you please Make a Video about this ...
Please Notice me .. God Bless🤗
Hello Leila. i follow you and really really appreciate your work. i would like if you show this fifo method solution in excel! thanks ahead
Thank you Leila for good explanation
It's still not clear very well for me because my English is not 100%
But I'll replay the video again
👍
I am doing FIFO and its effect on organizational performance for my research paper.
Interesting topic. Good luck with the paper!
@@LeilaGharani Thank you
@@LeilaGharani I should find a theory for my topic, but I can't seem to find any.
This may apply as a gage for departmentalized sales, but it would be misleading to think this directly corelates to a business’s profitability. Initial intentions should always be to get as much as the market will bear, and if the market will bear a higher price this month as opposed to last it may be wise to consider that stock replacement is going to go higher. Still an excellent place to begin for someone just learning the ropes.
I thought there is some thing related to excel, can we have a tutorial on maintaining stock in excel,
@@valver8362 well I would love to see your work... Plz forward it to contact@accnotech.com, if you feel comfortable...
Here is a video of my program. Only the interface is shown. The program is complex, the Russian can not understand it... :), but if you ask me again after watching the video, I will send it to you. With respect. th-cam.com/video/WW7ei0LVlVU/w-d-xo.html P.S.
Beauty With Brains ☺️
Could you please share with us about Cash Book? How to manage it as receipt or payment sides, or as petty cash.
I really struggle with these are. If you could even explain it shortly. I would be appreciate it.
I'll think about it. Thanks for your suggestion!
Love from Pakistan
Great video. By the way you are the best dressed person on youtube.
Wow, thank you!
The tutorial was very easy to understand the system, kindly make an implementation tutorial in excel, i have learned alot from your videos because there are many scenarios in your videos which covers everyone needs
During my days in manufacturing before, i have encountered FISH. First In, Still Here!
Haha, I've seen a lot of those too 😄
or weighted average cost maybe? Sumproduct (units purchased, cost per unit)/Sum (units purchased)
Yes, that's the AVCO method.
Ya, I understand the method, I'm just not sure how this would look on an inventory card. I also wouldn't mind seeing this in excel
Please can you create it in excel sheet.
Good explanation - but this video doesn't address the transfer-in or transfer-out costs cross periods - would be nice to see how this issue can be solved in Excel by using the 5 step method
Caution. If the new selling price drops below the purchase price, then you have to value at this price.
Stock value is the lower of cost or net realisable value (a fancy name for what the item is worth now)
Good point. Thanks for your feedback, David!
In India, the LIFO method is not acceptable for inventory valuation as it doesn't consider the current cost of inventory
👍
I don't get it
I thought you're indian 😍😍