FIFO vs AVCO

This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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September 19, 2024 at 6:47 pm #711576
wasifinferno
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While I’ve studied it before, still getting kind of stumped in questions..how does FIFO give lower value of closing inventory with falling prices and higher value with rising prices? Thanks!
September 20, 2024 at 9:22 am #711595
John Moffat
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With FIFO the inventory at the closing inventory is always the most recently purchased items.

If prices are falling then the most recent purchases will have cost less, whereas with rising prices the most recent purchases will have cost more.
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