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Which company gain more profit at the time of price increase, the one using LIFO or FIFO ?

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تم إضافة السؤال من قبل Feroz K
تاريخ النشر: 2014/05/21
mohamed Hakim CMA CPA Candidate
من قبل mohamed Hakim CMA CPA Candidate , Accounting Manager , Andersen saudi arabia

FIFO is more profitable

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FIFO : more profit  less cost of goods sold

LIFO : less   profit  expensive cost of goods sold

 

 

Tranquilino Jr Rivera
من قبل Tranquilino Jr Rivera , General Accountant , Enany Group of Companies

The Company using FIFO method will earn more profit. When prices increase, this means that ending inventory will be at a higher cost, leaving a lower Cost of Goods which in effect will give the Company a higher profit.

Wasim khan wazir
من قبل Wasim khan wazir , Finance Specialist , Mott Macdonald

FIFO method will generate more profit because when price of stock increase, amount of closing stock will be increase, overall amount of cost of goods will be become smaller and profit wil be bigger.

Ahmed Abdi Mahad
من قبل Ahmed Abdi Mahad , Director of Internal Auditing Directorate , Jigjiga University

When price is increasing the use of FIFO is more profitable than the use of LIFO before the earliest purchases cost cheaper than the most recent purchases, so selling the cheaper cost product is more profitable than the most recent products purchased at higher prices. 

Mohammad Ibrahim, CMA, CertIFR
من قبل Mohammad Ibrahim, CMA, CertIFR , Accounting Operation Team Leader , KFH ( Kuwait Finance House )

FiFo Method will generate more profit , because its CGS is lower tha Lifo Method in time of inflation or price increase.

Hujat Ullah Khan
من قبل Hujat Ullah Khan , Group Financial Controller , SAED Alraeda Group

The Comapny which is using FIFO will earn more profits when prices are increasing.

The reason is that they will sell first those goods which they purchased first i.e. at low cost and will earn more profits.

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