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Sep 30, · Last-in First-out (LIFO) is an inventory. Inventory Inventory is a current asset account found on the balance sheet, consisting of all raw materials, work-in-progress, and finished goods that a. valuation method based on the assumption that assets produced or acquired last are the first to be expensed. In other words, under the last-in, first Estimated Reading Time: 8 mins. To calculate FIFO (First-In, First Out) determine the cost of your oldest inventory and multiply that cost by the amount of inventory sold, whereas to calculate LIFO (Last-in, First-Out) determine the cost of your most recent inventory and multiply it by the amount of inventory sold. The FIFO (“First-In, First-Out”) method means that the. Last-in, first-out (LIFO) is an inventory method popular with companies that experience frequent increases in the cost of their product. LIFO is used primarily by oil companies and supermarkets, because inventory costs are almost always rising, but any business can use LIFO. Remember, there is no correlation between physical inventory movement and cost method.
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