- This topic has 4 replies, 2 voices, and was last updated 3 years ago by
.
Viewing 5 posts - 1 through 5 (of 5 total)
- Posts
Sir I read some where that disadvantage of FIFO is that reported profits are high in inflation (rising prices).
Please explain this. I mean it is better to have a higher profit.FIFO = first in, first out. Therefore, last in probably still here. Last purchases will have higher purchases prices when there is inflation therefore FIFO maximises closing inventory valuation, so minimising cost of sales, so maximising profits.
The aim is to get a fair view of profit, not one artificially boosted or distorted by an arbitrary accounting policy.
Viewing 5 posts - 1 through 5 (of 5 total)
- The topic ‘Material Valuations’ is closed to new replies.