LIFO and FIFO Inventory Method:
FIFO and LIFO Methods are Inventory Accounting Methods used to calculate the amount of money an entity has tied up in its Inventory. While under FIFO method, stock purchased first is sold first, while under LIFO Method stock purchased recently is sold first. Following are some advantges and disadvantages of these two inventory calculation method:
Advantages of LIFO Method:
- Since, under LIFO method, cost of material sold is taken to be cost of most recent inventory purchased, it reflects the current market price. Thus, this methods relates the book of accounts to the recent trend of market price of materials and ensures ...
