Management Accounts - Inventory valuation (FIFO LIFO) 0.0 / 5 ? AccountingInventory valuation National 5SQA Created by: Flossy15Created 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 1 of 6 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 2 of 6 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. 3 of 6 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 4 of 6 What is LIFO?? This metod assumes that the newests/most recently bought inventory is the first to be issuers when valuing inventory 5 of 6 What is FIFO?? This method accumes that the oldest inventory bought is the first to be issued when valuing inventory. 6 of 6
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