Which is better for inventory management: FIFO or LIFO?

I'm trying to decide between FIFO and LIFO for my inventory management. Which one should I choose?

It depends on your business needs. FIFO (First In, First Out) is often better for perishable goods, while LIFO (Last In, First Out) can be beneficial for tax purposes.

What are the tax implications of using LIFO?

Using LIFO can lead to lower taxable income during inflation, as it matches the most recent costs against revenues. However, it may not reflect the actual flow of inventory.

Are there any industries where FIFO is preferred over LIFO?

Yes, industries like food and pharmaceuticals often prefer FIFO to ensure older stock is sold first, reducing spoilage.

Can I switch from LIFO to FIFO easily?

Switching methods can be complex and may require adjustments in your accounting practices. It's best to consult with a financial advisor.