hello everyone
Jonathan N. Dorn CPA. As you can see this is Lifo and Fifo Inventory
valuation, to see how much your inventories worth, and your cost of goods sold
worth, and your net income, so this is just really fast how I do it
ok, so i got FIFO first-in-first-out, LIFO last in - first out
ok, this is how products come in,
this is for rising prices too, everything your going to see, is gonna say, oh rising prices and
inflation you know, very rarely i would think the prices go down, anyway so
30 10 20 30 This is how you get the inventory, this is how you get your product
ok rising prices, well say, you know first batch is $10 second batch $20
Third batch $30, okay I kind of think of this like a conveyor belt.
alright anyways, first-in-first-out, ok but it comes from this way, always in
rising prices, you know right
rising prices, look first-in-first-out, would be here !!
going to be the first out
last in first out, there, so first out means that they sold it, sold it your
last you know, out means sold, so that's going to be your cost of goods sold
so that's COGS
that's inventory, right here, this is going to be your
cost of goods sold
that's COGS Cost Of Goods Sold
here's going to be your inventory !!!! all right
got that. so, if you do first in first out your costs are going to be lower
ok, inventory is going to be higher
now what's that do your income??? If your costs are down, your incomes up. there inverse
what about LIFO ?? you do last in first out with rising prices your costs are
going to be higher, inventory is going to be lower, and Net income, if your costs are
higher, that means you're Net Income is going to be lower
alright, see you would think, everyone would just do this. Right? because your incomes lower.
Income lower. that means you pay less taxes, but really, if you think about
is this , last in first out doesn't make sense
so you're saying, the last thing in, so just came
off the truck, and that's the first thing you sell ???? What about the stuff sitting on the shelf??
we're not going to get into that, but anyways like to keep this short
but that's just how fast you can do this, so i will show you how fast
you know if you to question or something on a test, you can just fill it in like this
FIFO because it's the first one And LIFO 10 20 30
first-in-first-out. last in first out COGS COGS Inventory Inventory
this is lower, so this is higher, inverse, stays with that, higher, what's the
COGS are higher, INV Lower, Net Income Lower