FIFO and LIFO

[Deng]

Can someone give a detailed explanation of FIFO and LIFO to me ?
Like i get the equation where it records first good versus last good but theres something i still dont get but i cant put my finger on it

Thanks

[olivercutbill]

FIFO and LIFO are inventory management strategies.
The AN acronym for this section of the syllabus is POGO SQUINT

FIFO refers for 'First-in-first-out'. A fruit shop would use this as fruit spoils and thus the first stocked needs to be sold first.
LIFO refers to 'Last-in-first-out'. Apple uses this for iPhones as the new products are in demand more than the older models, and thus the most recently stocked iPhones are sold even when the old models still have stock.

LIFO can under value a inventory nominally as inflation is not accounted for. FIFO allows for inflation to take effect on newer stock and thus can over value an inventory.

Hope that helps!

[amina_98]

To add on to that,
Since LIFO under values inventory, businesses evade tax, therefore making it illegal to use in Australia. So if you're ever asked about advantages and disadvantages, you can mention that under disadvantages.