Moving Average Costnoun

Moving average cost is the perpetual form of weighted average cost. Each time stock is received, the cost of what is already on hand and the cost of what has just arrived are blended into one new unit cost, and every later issue or sale is costed at that figure until the next receipt moves it again.

Two details decide whether the figure can be trusted. The receipt has to carry its real cost — the price actually paid, net of recoverable tax and converted at the rate on the order when the supplier invoices in another currency — rather than a standing price on the item master. And the journal for the receipt has to post at that same cost, or the stock ledger and the general ledger drift apart one delivery at a time.