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The best manner which cause increase in income through inflation period is 1- FIFO 2- LIFO 3- weighted average 4- all answer are false

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تم إضافة السؤال من قبل Ahmed kandil , Cost Controller , Battour Holding Cpompany
تاريخ النشر: 2015/03/03
Muhammad Kassab  CPA CMA CertIFR
من قبل Muhammad Kassab CPA CMA CertIFR , Accounting Manager , Marine Buildings Landmarks

FIFO will lead to measuring COGS at the earliest Prices / costs (Lowest through inflation Periods),

while the ending inventory (CURRENT ASSET) will be measured at the latest (highest) Cost,

 

Minimizing Costs of goods sold  & Maximizing Assets leads to higher income.

هيثم ناجى
من قبل هيثم ناجى , محاسب اول , الفيوم لصناعة السكر

Correct answer is FIFO

when using LIFO at the conditions of inflation, the old units (low price) still at the inventory and the recent units (high price) are expensed thus, the COGS is higher at LIFO and profit is lower

in contrast FIFO is lower COGS and higher profit

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