What are the advantages of LIFO?
An example of an AI chatbot conversation about the advantages of LIFO accounting method.
What are the advantages of using the LIFO method in accounting?
The LIFO (Last In, First Out) method can help reduce tax liabilities during inflation by matching recent higher costs against revenues.
Can you explain how LIFO affects cash flow?
Certainly! LIFO can improve cash flow by deferring tax payments, as it often results in lower taxable income during inflation.
Are there any disadvantages to using LIFO?
Yes, LIFO can lead to outdated inventory values on the balance sheet and may not reflect the actual physical flow of goods.
Is LIFO allowed under IFRS?
No, LIFO is not permitted under IFRS. Companies using IFRS must choose between FIFO or weighted average cost methods.
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