Under the periodic system of inventory, opening inventory will always be higher using weighted average cost of inventory than FIFO.

Question

Quizplus · Accepted Answer

Under the periodic system of inventory, both weighted average and FIFO methods can result in different values for opening inventory. The value of opening inventory will depend on the cost of goods sold and the quantity of goods sold during the period. While weighted average method averages the cost of all units available and applies it to the units sold and the units in the ending inventory, FIFO assigns the cost of the earliest units purchased to the units sold during the period and the cost of the latest units purchased to the ending inventory. Therefore, depending on the cost of goods sold and the composition of the inventory, opening inventory can be higher under FIFO or weighted average method.

Under the Periodic System of Inventory, Opening Inventory Will Always