Weighted Average Cost
Definition
An inventory method valuing every unit at the average cost of all units available, recalculated as new stock arrives. It smooths the effect of price volatility and is permitted under both GAAP and IFRS.
Related Terms in Purchasing & Inventory
Perpetual Inventory
An inventory system that updates quantities and cost of sales continuously as each sale and receipt is recorded, so stock figures are available at any moment. Physical counts still matter, but they verify the records rather than create them.
Periodic Inventory
An inventory system that establishes stock levels and cost of sales only by counting at the end of each period. Cheaper to run than a perpetual system, but shrinkage and errors stay invisible between counts.
Landed Cost
The full cost of getting a purchased item into saleable position: supplier price plus freight, insurance, customs duty, handling and any non-recoverable taxes. Pricing on supplier invoice alone systematically understates true cost on imported goods.
Goods Receipt Note (GRN)
A document confirming that goods ordered via a purchase order have been physically received and inspected. Part of 3-way matching (PO → GRN → Invoice) to prevent overpayment. HelloBooks has full GRN with validation rules.
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