Advantages of FIFO and LIFO Methods

by Kucing
(Penang, Malaysia)



Q: What are the advantages of the FIFO and LIFO methods?



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Ari
by: Anonymous

Weighted Average:

Advantages:

1- Smoothen out fluctuations in purchase price.
2- Compared to FIFO or LIFO, this method is less cumbersome.
3- Seems a logical method as it assumes the values of identical items will be equal

Disadvantages:

4- Issues may not be at current economic value
5- As it is based on average method, the issue price may run to a number of decimal places

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