9/18/2023 0 Comments Lifo liner terms![]() Should the cost increases last for some time, then these savings could be significant for a business. ![]() This may be due to inflation.Īlthough the LIFO accounting method may mean a decrease in profits for a business, it can also mean less corporate tax a company has to pay. The LIFO method is used in the COGS (Cost of Goods Sold) calculation when the costs of producing a product or acquiring inventory has been increasing. If you need income tax advice please contact an accountant in your area. NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. What Is Difference Between LIFO and FIFO? The costs paid for those recent products are the ones used in the calculation. The LIFO method assumes that the most recent products added to a company’s inventory have been sold first. It is a method used for cost flow assumption purposes in the cost of goods sold calculation.
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