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Business
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Number of pages / Number of words: |
4 / 851 |
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As FIFO considers only the newer units and their prices in ending inventory, and LIFO considers only the older units and their prices in ending inventory, the average cost method considers all units and prices in computing the ending inventory.
c. If prices rise in one year and fall by an equal amount the next year, the total income for the two years would be the same under the FIFO method as under the LIFO method...
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If prices rise in one year and fall by an equal amount the next year, the total income for the two years would be the same under the FIFO method as under the LIFO method. Because FIFO considers newer prices and LIFO considers older prices the two will even out in the two years. FIFO income in year one would be higher and than in year two lower and LIFO would be lower in year one and higher in year two...
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