How do I calculate LIFO inventory?

Can you explain how to calculate LIFO for my inventory?

Sure! LIFO stands for Last In, First Out. It means the most recently purchased items are sold first.

How do I apply this method to my inventory records?

To apply LIFO, you need to track your inventory purchases and sales. When you sell an item, you record the cost of the most recent purchase.

Can you give me an example of a LIFO calculation?

Of course! If you bought 10 units at $5 each and then 5 units at $7 each, selling 6 units would cost you 6 x $7 = $42.

What are the advantages of using LIFO?

LIFO can reduce tax liability during inflation, as it matches recent higher costs against revenues.