{"id":1209,"date":"2021-10-21T23:47:52","date_gmt":"2021-10-21T23:47:52","guid":{"rendered":"https:\/\/alminawi.com\/?p=1131"},"modified":"2021-10-21T23:47:52","modified_gmt":"2021-10-21T23:47:52","slug":"does-fifo-typically-produce-the-same-results-under-both-periodic-and-perpetual-inventory-systems","status":"publish","type":"post","link":"https:\/\/e.americanpro.org\/?p=1209","title":{"rendered":"Does FIFO typically produce the same results under both Periodic and Perpetual inventory systems?"},"content":{"rendered":"<div class=\"ilZyRc\" data-wiz-rootname=\"ohfaMd\">\n<div aria-hidden=\"false\" data-animation-skip=\"\" data-ved=\"2ahUKEwjUqfLd5JKOAxWzq4kEHQTWHpUQ_sYPegYIAggAEBM\">\n<div class=\"tbIZh\">\n<div class=\"OVnuqb\" tabindex=\"0\" role=\"button\" aria-expanded=\"false\">Yes, it is accurate that<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div id=\"aim-chrome-initial-inline-async-container\" data-ved=\"2ahUKEwjUqfLd5JKOAxWzq4kEHQTWHpUQ_ZkOegYIAggAEBU\" data-hveid=\"CAIIABAV\">\n<div data-processed=\"true\">\n<div class=\"CKgc1d\" data-scope-id=\"turn\" data-processed=\"true\" data-complete=\"true\">\n<div class=\"Zkbeff\" data-subtree=\"aimc\" data-aimmrs=\"true\" data-ved=\"2ahUKEwjYlfXd5JKOAxWuj4kEHceWPIkQ2O0OegQIABAA\" data-hveid=\"CAAQAA\" data-processed=\"true\" data-complete=\"true\">\n<div class=\"pWvJNd\" data-processed=\"true\" data-complete=\"true\">\n<div class=\"mZJni\" data-container-id=\"main-col\" data-ved=\"2ahUKEwjYlfXd5JKOAxWuj4kEHceWPIkQ3KYQegQIABAD\" data-processed=\"true\" data-complete=\"true\">\n<div class=\"Y3BBE\" data-hveid=\"CAAQBA\" data-complete=\"true\" data-processed=\"true\"><b class=\"Yjhzub\" data-complete=\"true\" data-processed=\"true\">FIFO (First-In, First-Out) typically produces the same results under both Periodic and Perpetual inventory systems<\/b>.<span class=\"\" data-wiz-rootname=\"ohfaMd\" data-complete=\"true\" data-processed=\"true\"><span class=\"vKEkVd\" data-animation-atomic=\"\" data-sae=\"\">\u00a0<button class=\"rBl3me\" tabindex=\"0\" data-amic=\"true\" data-icl-uuid=\"bc7dd57b-d536-4279-94e6-3a3a2a440739\" aria-label=\"View related links\" data-ved=\"2ahUKEwjYlfXd5JKOAxWuj4kEHceWPIkQye0OegQIABAF\"><\/button><\/span><\/span><\/div>\n<div class=\"Y3BBE\" data-hveid=\"CAAQBg\" data-complete=\"true\" data-processed=\"true\">Here&#8217;s why:<\/div>\n<ul class=\"U6u95\" data-complete=\"true\" data-processed=\"true\">\n<li data-hveid=\"CAAQCA\" data-complete=\"true\" data-sae=\"\"><span class=\"T286Pc\" data-complete=\"true\"><b class=\"Yjhzub\" data-complete=\"true\">FIFO&#8217;s core assumption:<\/b>\u00a0FIFO assumes that the first goods purchased or produced are the first ones sold, meaning the oldest inventory costs are recognized first.<\/span><\/li>\n<li data-hveid=\"CAAQCQ\" data-complete=\"true\" data-sae=\"\"><span class=\"T286Pc\" data-complete=\"true\"><b class=\"Yjhzub\" data-complete=\"true\">Consistency across systems:<\/b>\u00a0This assumption holds true regardless of whether you are using a perpetual inventory system (real-time tracking of inventory with each transaction) or a periodic inventory system (updating inventory records and calculating Cost of Goods Sold &#8211; COGS &#8211; at the end of a period).<\/span><\/li>\n<li data-hveid=\"CAAQCg\" data-complete=\"true\" data-sae=\"\"><span class=\"T286Pc\" data-complete=\"true\"><b class=\"Yjhzub\" data-complete=\"true\">Same COGS and ending inventory:<\/b>\u00a0Since FIFO assigns the oldest costs to the units sold in both systems, the resulting Cost of Goods Sold (COGS) and the value of the ending inventory will be the same.<\/span><span class=\"\" data-wiz-rootname=\"ohfaMd\" data-complete=\"true\"><span class=\"vKEkVd\" data-animation-atomic=\"\" data-sae=\"\">\u00a0<button class=\"rBl3me\" tabindex=\"0\" data-amic=\"true\" data-icl-uuid=\"713b851b-53ad-4aff-94b9-66aa90bae74c\" aria-label=\"View related links\" data-ved=\"2ahUKEwjYlfXd5JKOAxWuj4kEHceWPIkQye0OegQIABAL\"><\/button><\/span><\/span><\/li>\n<\/ul>\n<div class=\"Y3BBE\" data-hveid=\"CAAQDA\" data-processed=\"true\" data-complete=\"true\"><b class=\"Yjhzub\" data-complete=\"true\" data-processed=\"true\">In simpler terms:<\/b><\/div>\n<div class=\"Y3BBE\" data-hveid=\"CAAQFw\" data-complete=\"true\" data-processed=\"true\">Think of it like a bakery selling bread. They want to sell the bread they baked first to ensure freshness. Whether they track each loaf sold individually (perpetual) or count their remaining bread at the end of the day (periodic), they will still prioritize selling the oldest bread first (FIFO). This means the cost they assign to the bread sold will be the cost of the first loaves baked, regardless of the inventory system used.<span class=\"\" data-wiz-rootname=\"ohfaMd\" data-complete=\"true\" data-processed=\"true\"><span class=\"vKEkVd\" data-animation-atomic=\"\" data-sae=\"\">\u00a0<button class=\"rBl3me\" tabindex=\"0\" data-amic=\"true\" data-icl-uuid=\"bec6363e-eb75-4884-8755-b5c713a469ec\" aria-label=\"View related links\" data-ved=\"2ahUKEwjYlfXd5JKOAxWuj4kEHceWPIkQye0OegQIABAY\"><\/button><\/span><\/span><\/div>\n<div class=\"Y3BBE\" data-hveid=\"CAAQGQ\" data-processed=\"true\" data-complete=\"true\"><b class=\"Yjhzub\" data-complete=\"true\" data-processed=\"true\">In contrast:<\/b><\/div>\n<div class=\"Y3BBE\" data-hveid=\"CAAQGw\" data-complete=\"true\" data-processed=\"true\"><span data-sae=\"\" data-mws=\"\">Other inventory cost flow assumptions, such as LIFO (Last-In, First-Out) or weighted average, may produce different results under periodic and perpetual systems. This is because their assumptions about which inventory is sold first (newest for LIFO, or an average for weighted average) are more sensitive to the timing of purchases and sales, which are tracked differently in perpetual and periodic systems<\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Yes, it is accurate that FIFO (First-In, First-Out) typically produces the same results under both Periodic and Perpetual inventory systems.\u00a0 Here&#8217;s why: FIFO&#8217;s core assumption:\u00a0FIFO assumes that the first goods purchased or produced are the first ones sold, meaning the oldest inventory costs are recognized first. Consistency across systems:\u00a0This assumption holds true regardless of whether [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1101,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[36],"tags":[],"class_list":["post-1209","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-accounting"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/e.americanpro.org\/wp-content\/uploads\/2019\/10\/109.jpg","_links":{"self":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1209"}],"version-history":[{"count":0,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1209\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/media\/1101"}],"wp:attachment":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}