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FIFO always best for inventory and for batches but if you are facing inflation problems then LIFO is best for profit point of view.
Its depends upon the nature of industry and type of inventory items. Sometimes specific identification method is the only best option available.
Average method is best workable in many cases but not for all.
Average is the best method
Average cost method is considered better comparing with other2 methods, as Average cost method projects neutral profits.
In an economy where inflation exists LIFO cost system will rpject lower profit as the costs keep increasing and therefore payment of taxes will be lower which in a way is beneficial for a tax paying organisation.
And if FIFO is selected, profits are projected more and which will end up the organisation paying higher taxes. Therefore, the decision of the same should be in line with the economy if that country.
Averaging of Cost is the Best inventory method for costing
Easiest inventory method for costing is AVCO. But the appropriate method should be in line with the product nature & business nature.
Average costing method is considered the best as it can give more accuracy, less mistake chances and better reports projection.
Small business accountants can use one of four distinct inventory costing methods to account for the cost of goods sold. Different inventory costing methods are best suited to different situations and financial goals, and no single method is inherently better than any other. Small business owners should understand the different types of inventory costing methods and the advantages of each to select the best method for their accounting system.
