What are FIFO and LIFO?
What are FIFO and LIFO?
Homework Answers
FIFO and LIFO are methods are inventory valuation methods where cost of goods sold and ending inventory is calculated. FIFO and LIFO has their own merits and demerits, Managers use these methods to manipulate profits and inventory values from time to time.
FIFO also known as First in First Out, means the items of inventory which are purchased first are issued are assumed to be used first. The goods sold are composed of goods purchased at first on the other hand Ending inventory consist of latest items purchased and so reflect most recent prices. In times of rising prices Ending inventory using FIFO will be of higher value than LIFO and vice versa.
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LIFO stands for Last in first out, is a inventory valuation method in which inventory purchased last are issued first. The ending inventory consist if oldest items purchased whereas Cost of goods sold reflects earliest items purchased. In Rising prices LIFO would show a lower value of inventory than FIFO method and Vice versa.
FIFO & LIFO Inventory Study the FIFO and LIFO explanations in Chapter 8. 1) Compute ending...
FIFO & LIFO Inventory Study the FIFO and LIFO explanations in Chapter 8. 1) Compute ending FIFO inventory and cost of goods sold. Assume $90,000 sales; beginning inventory 500 units @$50; purchases of 400 units @$50; 100 units @$65; 400 units @$80. 2) Compute the cost of goods sold percentage of sales. 3) Compute ending LIFO inventory and cost of goods sold, using same assumptions. 4) Compute the cost of goods sold percentage of sales. 5) Comment on the difference...
The conversion of a LIFO inventory to approximate the inventory at FIFO is accomplished through application...
The conversion of a LIFO inventory to approximate the inventory at FIFO is accomplished through application of which one of the following formulas? FIFO inventory = LIFO inventory + LIFO reserve FIFO inventory = LIFO inventory × LIFO reserve FIFO inventory = LIFO inventory - LIFO reserve FIFO inventory = LIFO inventory ÷ LIFO reserve
Define LIFO and FIFO and state the tax benefits of each. Also, can either LIFO or...
Define LIFO and FIFO and state the tax benefits of each. Also, can either LIFO or FIFO be used to massage the numbers in any way?
periodic inventory using FIFO, LIFO, and weighted average cost methods Periodic Inventory Using FIFO, LIFO, and...
periodic inventory using FIFO, LIFO, and weighted average cost
methods
Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: 12 units at $35 $420 Jan. 1 Inventory 540 Purchase 15 units at $36 Aug. 7 380 Purchase 10 units at $38 Dec. 11 $1,340 37 units There are 20 units of the item in the physical inventory at December 31. The periodic inventory system is...
what is your recommendations to wild water sports changing from lifo to fifo
what is your recommendations to wild water sports changing from lifo to fifo
Comparing Inventory Methods Assume that a firm separately determined inventory under FIFO and LIFO and then...
Comparing Inventory Methods Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. a. In each dropdown that follows, select the correct sign [less than (<), greater than (>), or equal (=)] for each comparison, assuming periods of rising prices. 1. FIFO inventory LIFO inventory 2. FIFO cost of merchandise sold LIFO cost of merchandise soldd 3. FIFO net income LIFO net income 4. FIFO income taxes LIFO income taxes b. Why would management...
financial complications change from lifo to fifo
financial complications change from lifo to fifo
Why must we be able to distinguish between LIFO and FIFO? What importance does this hold...
Why must we be able to distinguish between LIFO and FIFO? What importance does this hold in the accounting field?
Exercise 5.18 LO 7,8 LIFO versus FIFO-impact on ROI Mannisto Inc. uses the FIFO inventory cost...
Exercise 5.18 LO 7,8 LIFO versus FIFO-impact on ROI Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $1,500,000 and average assets of $10,000,000. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $300,000 more than under FIFO, and its average assets would have been $300,000 less than under FIFO. Required: a. Calculate the...
29A Accounting for inventory using the perpetual inventory system/FIFO, LIFO, and weighted average, and comparing FIFO,...
29A Accounting for inventory using the perpetual inventory system/FIFO, LIFO, and weighted average, and comparing FIFO, LIFO, and weighted-average Iron Man began August with 65 units of iron inventory that cost $30 each. During August, the company completed the following inventory transactions: Units Unit Cost Unit Sale Price $ 81 Aug. 3 8 85 $50 Sale Purchase Sale Purchase 75 45 Requirements 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method. 2. Prepare...
periodic inventory using FIFO, LIFO, and weighted average cost
methods
Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: 12 units at $35 $420 Jan. 1 Inventory 540 Purchase 15 units at $36 Aug. 7 380 Purchase 10 units at $38 Dec. 11 $1,340 37 units There are 20 units of the item in the physical inventory at December 31. The periodic inventory system is...
Exercise 5.18 LO 7,8 LIFO versus FIFO-impact on ROI Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $1,500,000 and average assets of $10,000,000. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $300,000 more than under FIFO, and its average assets would have been $300,000 less than under FIFO. Required: a. Calculate the...
29A Accounting for inventory using the perpetual inventory system/FIFO, LIFO, and weighted average, and comparing FIFO, LIFO, and weighted-average Iron Man began August with 65 units of iron inventory that cost $30 each. During August, the company completed the following inventory transactions: Units Unit Cost Unit Sale Price $ 81 Aug. 3 8 85 $50 Sale Purchase Sale Purchase 75 45 Requirements 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method. 2. Prepare...
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