inventory cost policy -> profit? (1 Viewer)

[Kazuya]

hey all,

Don't suppose anyone could help me out with this accounting problem? If you're only given ending inventory and COGS expense balances for a certain year under FIFO/LIFO/average cost, how would you go about determining which one gives the highest/lowest profit? (This is one of the questions in the textbook btw.) You aren't given amount of sales or sales price so I have no idea what to do...it's probably some common sense answer...

Thanks

 

[RZ]

i think it was less COGS more Profit you have

 

[Eagles]

i think it was less COGS more Profit you have

yup, that is correct. Since profit is sales less cost of goods sold.

Average cost shows higher COGS and lower inventory balance than FIFO
LIFO produces higher COGS and lower inventory than FIFO or AVGE