Discuss why you think the authors’ statement below causes confusion among students in regard to understanding the differences among FIFO, LIFO, and average cost.

After reading Greenberg and Wilner’s article, “Teaching Inventory Accounting: A Simple Learning Strategy to Achieve Student Understanding” (2011), found at: Greenberg, R. K. & Wilner, N.A. (2011). Teaching inventory accounting: A simple learning strategy to achieve student understanding . Issues in Accounting Education, 26(4): 835-844

Discuss why you think the authors’ statement below causes confusion among students in regard to understanding the differences among FIFO, LIFO, and average cost:

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 (p.836).