Management Accounts - Inventory valuation (FIFO LIFO)

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  • Created by: Flossy15
  • Created on: 28-12-18 11:57
What are the advantages of FIFO??
Valuation is true and fair for accounting purposes, best used when prices are stable and acceptable for tax purposes
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What are the advantages of LIFO??
Had a closer relationship with current prices levels, Preferable for estimating purposes and inventory and profit calculations are understated
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What are the disadvantages of FIFO??
Not an accurate value of current prices, may charge an unfair price to your customers and arithemtical calculations are time consuming.
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What are the disadvantages of LIFO??
Not an accruate value of currnet prices, not suitable for slow moving inventory and not acceptable for tax purpses
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What is LIFO??
This metod assumes that the newests/most recently bought inventory is the first to be issuers when valuing inventory
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What is FIFO??
This method accumes that the oldest inventory bought is the first to be issued when valuing inventory.
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Other cards in this set

Card 2

Front

What are the advantages of LIFO??

Back

Had a closer relationship with current prices levels, Preferable for estimating purposes and inventory and profit calculations are understated

Card 3

Front

What are the disadvantages of FIFO??

Back

Preview of the front of card 3

Card 4

Front

What are the disadvantages of LIFO??

Back

Preview of the front of card 4

Card 5

Front

What is LIFO??

Back

Preview of the front of card 5
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