Which purchase price belongs to the stock you just sold?
Identical goods can be bought at different prices before some are sold. Periodic FIFO and weighted-average accounting assign those costs differently between sales and remaining inventory, without necessarily describing the physical order of items leaving the shelf.
Questions you could explore
- How do the two methods treat a low-price purchase followed by a high-price one?
- Why does the total purchase cost still have to be accounted for?
Start reading
- OpenStax, Rice University10.2 Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method
OpenStax compares periodic FIFO and weighted-average cost assignment; its period-wide average is the relevant model here.
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