Understanding differences among FIFO-LIFO and cost

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Reference no: EM13864836

Discuss why you think the authors’ statement below cause’s confusion among students in regard to understanding the differences among FIFO, LIFO, and average cost. Answer in three paragraphs or less using complete sentences.

"Students have a difficult time understanding the difference between the physical flow of inventory and the cost flow assumption. Specifically, they do not understand that the actual physical flow of goods relates to a process undertaken by a manufacturer or merchandiser, while the cost flow assumption relates to accounting reporting conventions. The physical flow does not have to be the same as the cost flow assumption."

Reference no: EM13864836

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