Respuesta :
In periods of rising materials prices, the LIFO method results in a higher cost of goods sold, lower profits, and therefore lower income taxes. In periods of declining materials prices, the FIFO method yields the same results.
What is LIFO?
FIFO and LIFO accounting are procedures used in inventory management and financial matters regarding the amount of money a corporation must have tied up in inventory of manufactured items, raw materials, parts, components, or feedstocks.
Last in, first out (LIFO) is a system of inventory accounting. The costs of the most recent products purchased (or produced) are the first to be expensed under LIFO.
company buys bulk coffee mugs and sells them on the internet The cost of goods sold (COGS) of One Cup varies depending on whether it uses LIFO or FIFO. In the first scenario, wholesale mug prices rise from 2016 to 2019.
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