LIFO VERSUS FIFO: UPDATING WHAT WE HAVE LEARNED Nicole Thorne Jenkins Doctoral Student in Accounting Morton Pincus Associate Professor of Accounting College of Business Administration The University of Iowa 108 PBAB Iowa City‚ IA 52242-1000 U.S.A. 319/335-0915 FAX 319/335-1956 morton-pincus@uiowa.edu September 1998 (version 1.2) LIFO VERSUS FIFO: UPDATING WHAT WE HAVE LEARNED 1.0 INTRODUCTION The statutory mandate in U.S. tax law that firms using the last-in first-out (LIFO) inventory
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units of inventory that cost a total of $190. During June‚ Amazon purchased and sold goods as follows: June 8 Purchase 30 units @ $20 June 14 Sale 25 units @ $40 June 22 purchase 20 unit @ $22 June 27 Sale 30 unit @ $40 Requirements: Under the FIFO and LIFO method 1. How much is Amazon’s cost of goods sold 2. How much is Amazon’s gross profit or loss 3. Journalize all Amazon’s inventory transactions for June. 4. Which method maximizes gross profit? Q2: Collins Industries’ inventory records show the
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FIFO and LIFO accounting Methods are accounting techniques used in managing inventory and financial matters involving the amount of money a company has tied up within inventory of produced goods‚ raw materials‚ parts‚ components‚ or feed stocks. FIFO stands for first-in‚ first-out‚ meaning that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact newest physical object has been tracked and sold; this is just an inventory technique. LIFO stands for last-in
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MEHJABEEN SUBMITTED ON: 30/ 04/ 2012 FIFO [ FIRST IN FIRST OUT ] | ADVANTAGES | DISADVANTAGES | * If the business trades perishable goods with the use of FIFO it can avoid obsolescence of stock. * Closing stock valuation is done upon the most recent prices paid for stock which takes into account the rate of inflation. * The method is more realistic as the inventory is issued in the order in which they have been received. * FIFO is acceptable method of inventory valuation
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LIFO‚ last-in-first-out and FIFO‚ first-in-first-out the two most common inventory accounting methods. The choice of the method of inventory accounting by a small business can directly impact its balance sheet‚ income statement‚ and statement of cash flows. Not only do companies have to track the number of items sold‚ but they have to track the cost of each item. These two methods are ways in which they can do that. Each will have a different effect on their financial statements. How is Inventory
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FIFO and LIFO Inventory Methods Tonia Green Accounting 211 – Financial Accounting Excelsior College FIFO and LIFO Inventory Methods This paper will provide a comparison of the accounting implications of valuing inventory under the First-in‚ First-out (FIFO) and Last-in‚ First-out (LIFO) methods. With very few exceptions‚ every business depends on an inventory to operate. Whether the business provides a service or sells products to its consumers‚ supplies and stock are required to operate
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Accounting Department Memorandum To: Executive Vice President From: Yvonne Dixon and Teammates Subject: Last In/First Out (LIFO) versus First In/First Out (FIFO) Date: February 13‚ 2012 Executive Vice President‚ Late last week our team had a team meeting to discuss LIFO versus FIFO methods of inventory for the Cost of Goods Sold (COGS) as to our company needs. This was a very lengthy and well communicated process for our team. I feel that we as a team have worked to give you the best
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Merrimack Tractors and Mowers‚ Inc.: LIFO or FIFO? 1.- Study the financial information for reel mower units that James Colburn prepared for Rick Martino. (Assume that the reel mower units are typical of all classes of inventory at Merrimack). Prepare a pro-forma income statement assuming no changes in accounting policy for 2008‚ and assuming the company sells 10‚000 units each quarter at a price of 2‚000 per unit with Sales General and Administration costs the same as for 2007. Sales Quarter Units
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13-06A 2Problem 13-06A partiallyCorrect 1. 5.21 partiallyCorrect 2. 5.83 incorrect 3. 0.00 incorrect 4. 0.00 Wrong "Check My Work" Clicked: 3 Times Hint(s) Check My Work eBookeBook Problem 13-6A Specific Identification‚ FIFO‚ LIFO‚ and Weighted-Average Swing Company’s beginning inventory and purchases during the fiscal year ended September 30‚ 20-2‚ were as follows: Use the following information for the specific identification method. There are 1‚300 units of inventory
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liability because accelerated methods make a difference. In addition‚ Canada Steel should not attempt to pay the liability because it is a loan‚ which is interest free. (2) LIFO can reduce taxes and increase cash flow. Inflation declines in recession‚ but it does not mean its recurrence is impossible. A return to FIFO would relinquish the tax savings. The quality of earnings to be affected adversely by the lack of consistency in inventory method. The $4 million upward adjustment in working capital
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