How Do You Calculate Perpetual Inventory Using Fifo?
Perpetual inventory using FIFO (first-in, first-out) involves recording the cost of goods sold based on the cost of the oldest inventory items first. To calculate perpetual inventory using FIFO, it is necessary to maintain an up-to-date inventory record that shows the number of items in stock, the unit cost of each item, and the total value of inventory. When a sale is made, the cost of the oldest items on hand is used to calculate the cost of goods sold. The remaining inventory record is then adjusted to reflect the new inventory balance. This process is repeated for each sale and purchase transaction.