Why might a company use two methods (LIFO and FIFO) to account for its inventory?
Homework Answers
Though, it is uncommon to use two methods( LIFO and FIFO) to account for its inventory by the company, but due to some reasons the company may use two methods for inventory.
1. Company may use LIFO method for some items of inventory and for other, FIFO may be used. It depends on the nature of the inventory. Like for perishable products, FIFO method is used. If inventory is of dresses, then LIFO may be used.
2. For cost accounting purpose and for financial accounting purpose, different method may be used.
3. For tax purpose, again different method may be used other than the method regularly employed by the company.
4. Different departments or branches also use different method for their inventory. It is different matter that reconciliation is made later.
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might a company use two methods (LIFO and FIFO) to account for its
inventory?
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Accounting procedures allow a business to evaluate their inventory costs based on two methods: LIFO (Last...
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inventory costs based on two methods: LIFO (Last In First Out) or
FIFO (First In First Out). A manufacturer evaluated its finished
goods inventory (in $000s) for five products with the LIFO and FIFO
methods. To analyze the difference, they computed (FIFO - LIFO) for
each product. Based on the following results, does the LIFO method
result in a lower cost of inventory than the FIFO method?
What are the degrees of...
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periodic inventory using FIFO, LIFO, and weighted average cost
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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...
Accounting procedures allow a business to evaluate their
inventory costs based on two methods: LIFO (Last In First Out) or
FIFO (First In First Out). A manufacturer evaluated its finished
goods inventory (in $000s) for five products with the LIFO and FIFO
methods. To analyze the difference, they computed (FIFO - LIFO) for
each product. Based on the following results, does the LIFO method
result in a lower cost of inventory than the FIFO method?
What are the degrees of...
Exercise 5-7 Perpetual: Inventory costing methods-FIFO and LIFO LO P1 Required: Hemming uses a perpetual inventory system. 1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. 2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. 3. Compute the gross margin for FIFO method and LIFO method.
peridic inventory using fifo, lifo, and weighted average cost
methods... plz help me!
Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 9 units at $38 Inventory Purchase Purchase $342 656 Aug. 7 Dec. 11 16 units at $41 10 units at $43 430 35 units $1,428 There are 18 units of the item in the physical inventory at December 31. The periodic...
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