Definition

Average-cost method

Average-cost method is an inventory costing method that uses the weighted average unit cost to allocate to ending inventory and cost of goods sold the cost of goods available for sale. The average-cost method assumes that goods are similar in nature.

Share it:  Cite

More from this Section

  • Return on assets
    Return on assets is an overall measure of profitability computed by dividing net income ...
  • Income summary
    Income summary refers to a temporary account used in closing revenue and expense accounts. ...
  • Cost & Cost principle
    Cost consists of all expenditures necessary to acquire the asset and make it ready for ...
  • FOB shipping point & FOB destination
    FOB shipping point means that the seller places the goods free on board the carrier, and ...
  • Accruals
    Accruals are adjusting entries for either accrued revenues or accrued expenses. Companies ...