Inventory Cost Flow Foundations: Beginning Inventory, Purchases, and COGS
To teach the basic accounting logic of inventory movement before method comparison begins in Lesson 3. Students must understand that ending inventory value depends on cost assignment choices, not just unit counts.
- ▶Trace inventory movement through the ending inventory formula step by step
- ▶Distinguish between physical flow (units moving) and cost flow (value assignment)
- ▶Explain why ending inventory value is not obvious when the same product is purchased at different prices
- ▶Identify where mistakes commonly occur in inventory tracking
This lesson follows a structured 6-phase learning model designed for authentic project-based learning.
Hook
Discover why ending inventory value is not obvious just from counting what remains on the shelf
Introduction
Learn how inventory moves through the formula and why physical flow differs from cost flow
Guided Practice
Walk through a simple inventory timeline by hand, tracking units available and units remaining
Independent Practice
Compute goods available for sale and identify what must be assigned to COGS versus ending inventory
Assessment
Check understanding of beginning inventory, purchases, goods available for sale, and ending inventory logic
Closing
Summarize the movement logic and preview Lesson 3 as the introduction of FIFO and LIFO