Inventory Valuation (LIFO and FIFO) Methods Assignment Help
There exist various ways to determine inventory valuation, the two popular methods include the LIFO or last-in-last-out technique and the FIFO or first-in-first-out technique. Under the LIFO technique, the last entrants in the inventory are marketed first, therefore the price of the products are marketed based on the recent inventory. Under FIFO method, the earliest entrants are marketed first so the prices are marketed depending on the traditional inventory. The students seeking help in inventory accounting require a website that can help them to sail through the assignments smoothly. BookMyEssay is one such online assignment help provider, and here we understand the concern of a student and the student service remains our top and only priority. We have accounting assignment tutors who offer the students Inventory Valuation (LIFO and FIFO) Methods assignment help with meaningful examples to make them understand the concept better.
Inventory Accounting is a topic in which the students face multiple questions, from inventory specification to the valuation of inventory. The methods of inventory valuation are an accounting concept which the students need to understand in-depth so that they can handle the complex LIFO and FIFO problems. The valuation method seems to be quite easy as far as definition is concerned but become complicated when asked to solve the numerical. The students can solve them perfectly by taking Inventory Valuation (LIFO and FIFO) Methods Assignment Help from BookMyEssay. If a student takes assignment help from us, it saves his time which he can utilize to study other subjects. Moreover, if they buy assignment service help from us on accounting of inventories they can understand the concepts in a better way and help them to get good grades. The students can approach us online so that they can get help anytime.
Overview of the Two Methods of Inventory Management
LIFO or Last in first out and FIFO or first in first out are two commons inventory valuation methods. These two methods of valuing inventory give different results in a significant way.
- LIFO (Last in, first out) – In this method, the last items on the shelf are sold first. It is a good method to use if the products are non-perishable and at the risk of becoming obsolete. In LIFO, if the prices rise, the items priced higher are sold first and the lower priced items are kept in the inventory. This increases the cost of goods sold by a company and reduces its net income, which in turn decreases the tax liability of a company.
- FIFO (First in, last out) – FIFO is a method where the fist items that are put on the shelf are sold first, therefore the oldest items are first sold. This system is used by the companies if the products are perishable and subject to rapid obsolescence. When the prices go up, FIFO gives a lower cost for the goods sold as the older and the cheaper goods are sold first. It looks better for the investors and the bankers but the tax liability is greater because of higher profit. This method represents the price of recent purchases and therefore reflects the replacement costs more accurately.
If the prices are rising, each of these two accounting methods gives the following results:
- FIFO is a better indication of the inventory valuation but it increases the net income too. Increasing net income indicates payment of more taxes.
- LIFO is not a good indicator of inventory valuation because of leftover inventory is obsolete and old. This results in much lower valuation than the actual prices and also results in reduced net income.
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