IN FIFO periodic method, all the opening inventory and purchases for a period are taken and then the Cost of goods sold is calculated by taking the oldest purchased units first, therefore, the closing inventory comprises the latest purchased units. In the LIFO periodic method, all the opening inventory and purchases for a period are taken and then the Cost of goods sold is calculated by taking the latest purchased units first, therefore, the closing inventory comprises the oldest purchased units.
FIFO stands for "first in, first out" and assumes that the first item put into inventory is also the first item sold. Also known as "last in, first out," LIFO assumes that the last item added to inventory is sold first.
To calculate FIFO (first in, first out), determine the cost of the oldest inventory and multiply that cost by the amount of inventory sold while calculating the cost of inventory using LIFO (last in, first out). increase. The oldest inventory determines the current inventory and is multiplied by the amount of inventory sold.
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