But, what if you knew the cost of goods sold and wanted to calculate ending inventory instead? Ending inventory is equal to goods available for sale minus the cost of goods sold. If a physical ending inventory count hasn’t happened yet, a company will use this formula to compute the ending inventory balance. Every time a sale or purchase occurs, they are recorded in their respective ledger accounts.
What Is the FIFO Method?
The company's accounts will better reflect the value of current inventory because the unsold products are also the newest ones. Assume a company purchased 100 items for...