Last In First Out - Which is better LIFO or FIFO?

Q: Which is better LIFO or FIFO?

If your inventory costs are going up, or are likely to increase, LIFO costing may be better, because the higher cost items (the ones purchased or made last) are considered to be sold. ... If you want a more accurate cost, FIFO is better, because it assumes that older less-costly items are most usually sold first.

Answer

The higher-priced products (those bought or manufactured last) are deemed sold, therefore LIFO costing can be a preferable option if your inventory costs are rising or will rise. Since FIFO presupposes that older, less expensive commodities are often sold first, it provides a more realistic pricing.

Last In First Out - Which is better LIFO or FIFO?

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