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Inventory

 This is the specific  The first items of
cost of purchasing inventory received

units of inventory. are assumed to be
the first ones sold.

Unit FIFO – First
cost in, first out

AVCO – AVCO –
Periodic Continuous

weighted weighted
average average

 The cost of an item of  The cost of an item of
inventory is calculated inventory is calculated
taking the average of all taking the average of all
inventory held inventory held
 An average cost for the  With this valuation

period is calculated method, an updated
based on opening average cost is
inventory + cost of calculated following
inventory purchased each a purchase of
.
during the year. goods.

Illustrations and further practice

Now try questions TYU 10 from Chapter 6.

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